LyondellBasell Industries N.V. (NYSE:LYB) Q3 2020 Earnings Conference Call - Final Transcript

Oct 30, 2020 • 11:00 am ET

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LyondellBasell Industries N.V. (NYSE:LYB) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Bhavesh V. Patel

joint venture is capable of generating $150 million of annual EBITDA for our company.

In 2018, we expanded our compounding business by acquiring A. Schulman and reform the Advanced Polymer Solutions segment. With integration completed, we are on track to capture $200 million in estimated synergies, that should become increasingly visible as volumes recover in the markets served by this segment.

We expect to close the transaction for the Louisiana joint venture with Sasol before the end of this year. At full capacity and historical margins, this investment is capable of contributing $330 million in EBITDA to our company. In our Intermediates and Derivatives segment, the combination of two new Propylene Oxide investments in China, and Houston starting in 2022 and 2023 put together add almost $500 million of annual estimated EBITDA. The formula is very simple, more EBITDA and moderating capital expenditures should result in higher free cash flow at any point in the business cycles.

Let me summarize this quarter's highlights and outlook with Slide 21. During the third quarter, LyondellBasell's leading and advantaged global positions enabled us to capture value and deliver resilient results. We demonstrated commercial agility by matching production with continued demand from packaging and healthcare markets and increasing volumes from automotive and other durable goods markets. We're seeing higher demand for our products from recovering global economies.

Our North America polyethylene exports are increasing to support growing demand in Asia. Markets for discretionary durable goods are improving. As global mobility increases, the demand and margins for transportation fuels will eventually show improvement. Our financial strategy continues to support our commitment to an investment-grade rating. With sound cash generation and disciplined capital deployment decisions, we are focused on maintaining the continuity of our dividend and prioritizing deleveraging upon completion of the Sasol transaction.

Our goal at LyondellBasell is to capture opportunities throughout all points of business cycles. Over the past several years, we have carefully planted the seeds for our profit-generating growth by building, acquiring and partnering on assets that expand our reach with new capabilities to sustainably harvest profitability from advantaged feedstocks, expanded product ranges and an increased footprint in the world's fastest-growing markets. We look forward to discussing our progress on maximizing cash flow from these investments over the coming quarter.

We are now pleased to take your questions.