UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q | | | | | | |
☒ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 20212022
or | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-34726
LYONDELLBASELL INDUSTRIES N.V.
(Exact name of registrant as specified in its charter) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Netherlands | | | | | 98-0646235 | |
| (State or other jurisdiction of incorporation or organization) | | | | (I.R.S. Employer Identification No.) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 1221 McKinney St., | | 4th Floor, One Vine Street | | | | |
| Suite 300 | | London | | Delftseplein 27E | |
| Houston, | | Texas | | W1J0AH | | 3013AA | Rotterdam | |
| USA | | 77010 | | United Kingdom | | Netherlands | |
(Addresses of registrant’s principal executive offices) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (713) | | 309-7200 | | | +44 (0) | | 207 | 220 2600 | | | +31 (0) | | 10 | 2755 500 | |
(Registrant’s telephone numbers, including area codes)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbol | | Name of Each Exchange On Which Registered |
Ordinary Shares, €0.04 Par Value | | LYB | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | |
Large accelerated filer | x | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The registrant had 334,515,368326,206,003 ordinary shares, €0.04 par value, outstanding at July 28, 202127, 2022 (excluding 5,578,28814,131,001 treasury shares).
LYONDELLBASELL INDUSTRIES N.V.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF INCOME
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars, except earnings per share | Millions of dollars, except earnings per share | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars, except earnings per share | 2022 | | 2021 | | 2022 | | 2021 |
Sales and other operating revenues: | Sales and other operating revenues: | | | | | | | | Sales and other operating revenues: | | | | | | | |
Trade | Trade | $ | 11,334 | | | $ | 5,371 | | | $ | 20,185 | | | $ | 12,674 | | Trade | $ | 14,559 | | | $ | 11,334 | | | $ | 27,399 | | | $ | 20,185 | |
Related parties | Related parties | 227 | | | 175 | | | 458 | | | 366 | | Related parties | 279 | | | 227 | | | 596 | | | 458 | |
| | 11,561 | | | 5,546 | | | 20,643 | | | 13,040 | | | 14,838 | | | 11,561 | | | 27,995 | | | 20,643 | |
Operating costs and expenses: | Operating costs and expenses: | | Operating costs and expenses: | |
Cost of sales | Cost of sales | 8,676 | | | 4,894 | | | 16,354 | | | 11,762 | | Cost of sales | 12,267 | | | 8,676 | | | 23,403 | | | 16,354 | |
| Impairments | | Impairments | 69 | | | — | | | 69 | | | — | |
Selling, general and administrative expenses | Selling, general and administrative expenses | 327 | | | 288 | | | 614 | | | 583 | | Selling, general and administrative expenses | 329 | | | 327 | | | 657 | | | 614 | |
Research and development expenses | Research and development expenses | 32 | | | 25 | | | 61 | | | 52 | | Research and development expenses | 32 | | | 32 | | | 64 | | | 61 | |
| | 9,035 | | | 5,207 | | | 17,029 | | | 12,397 | | | 12,697 | | | 9,035 | | | 24,193 | | | 17,029 | |
Operating income | Operating income | 2,526 | | | 339 | | | 3,614 | | | 643 | | Operating income | 2,141 | | | 2,526 | | | 3,802 | | | 3,614 | |
Interest expense | Interest expense | (130) | | | (125) | | | (240) | | | (214) | | Interest expense | (58) | | | (130) | | | (132) | | | (240) | |
Interest income | Interest income | 5 | | | 4 | | | 7 | | | 7 | | Interest income | 4 | | | 5 | | | 6 | | | 7 | |
Other income, net | 14 | | | 4 | | | 39 | | | 4 | | |
Other (expense) income, net | | Other (expense) income, net | (86) | | | 14 | | | (67) | | | 39 | |
Income from continuing operations before equity investments and income taxes | Income from continuing operations before equity investments and income taxes | 2,415 | | | 222 | | | 3,420 | | | 440 | | Income from continuing operations before equity investments and income taxes | 2,001 | | | 2,415 | | | 3,609 | | | 3,420 | |
Income from equity investments | Income from equity investments | 148 | | | 61 | | | 285 | | | 61 | | Income from equity investments | 22 | | | 148 | | | 51 | | | 285 | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | 2,563 | | | 283 | | | 3,705 | | | 501 | | Income from continuing operations before income taxes | 2,023 | | | 2,563 | | | 3,660 | | | 3,705 | |
Provision for (benefit from) income taxes | 506 | | | (32) | | | 576 | | | 43 | | |
Provision for income taxes | | Provision for income taxes | 378 | | | 506 | | | 694 | | | 576 | |
Income from continuing operations | Income from continuing operations | 2,057 | | | 315 | | | 3,129 | | | 458 | | Income from continuing operations | 1,645 | | | 2,057 | | | 2,966 | | | 3,129 | |
Income (loss) from discontinued operations, net of tax | 2 | | | (1) | | | 0 | | | 0 | | |
(Loss) income from discontinued operations, net of tax | | (Loss) income from discontinued operations, net of tax | (1) | | | 2 | | | (2) | | | — | |
Net income | Net income | 2,059 | | | 314 | | | 3,129 | | | 458 | | Net income | 1,644 | | | 2,059 | | | 2,964 | | | 3,129 | |
| Dividends on redeemable non-controlling interests | Dividends on redeemable non-controlling interests | (1) | | | (1) | | | (3) | | | (3) | | Dividends on redeemable non-controlling interests | (1) | | | (1) | | | (3) | | | (3) | |
Net income attributable to the Company shareholders | Net income attributable to the Company shareholders | $ | 2,058 | | | $ | 313 | | | $ | 3,126 | | | $ | 455 | | Net income attributable to the Company shareholders | $ | 1,643 | | | $ | 2,058 | | | $ | 2,961 | | | $ | 3,126 | |
| Earnings per share: | Earnings per share: | | Earnings per share: | |
Net income attributable to the Company shareholders — | | |
Basic: | | |
Net income (loss) attributable to the Company shareholders — | | Net income (loss) attributable to the Company shareholders — | |
Basic | | Basic | |
Continuing operations | Continuing operations | $ | 6.13 | | | $ | 0.94 | | | $ | 9.33 | | | $ | 1.36 | | Continuing operations | $ | 5.00 | | | $ | 6.13 | | | $ | 9.01 | | | $ | 9.33 | |
Discontinued operations | Discontinued operations | 0.01 | | | 0 | | | 0 | | | 0 | | Discontinued operations | — | | | 0.01 | | | (0.01) | | | — | |
| | $ | 6.14 | | | $ | 0.94 | | | $ | 9.33 | | | $ | 1.36 | | | $ | 5.00 | | | $ | 6.14 | | | $ | 9.00 | | | $ | 9.33 | |
Diluted: | | | | | | | | |
Diluted | | Diluted | | | | | | | |
Continuing operations | Continuing operations | $ | 6.12 | | | $ | 0.94 | | | $ | 9.32 | | | $ | 1.36 | | Continuing operations | $ | 4.98 | | | $ | 6.12 | | | $ | 8.99 | | | $ | 9.32 | |
Discontinued operations | Discontinued operations | 0.01 | | | 0 | | | 0 | | | 0 | | Discontinued operations | — | | | 0.01 | | | (0.01) | | | — | |
| | $ | 6.13 | | | $ | 0.94 | | | $ | 9.32 | | | $ | 1.36 | | | $ | 4.98 | | | $ | 6.13 | | | $ | 8.98 | | | $ | 9.32 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 |
Net income | $ | 2,059 | | | $ | 314 | | | $ | 3,129 | | | $ | 458 | |
Other comprehensive income (loss), net of tax – | | | | | | | |
Financial derivatives | (78) | | | (26) | | | 97 | | | (364) | |
Unrealized (losses) gains on available-for-sale debt securities | (1) | | | 3 | | | (1) | | | 1 | |
Defined benefit pension and other postretirement benefit plans | 17 | | | 11 | | | 28 | | | 21 | |
Foreign currency translations | 77 | | | 66 | | | (30) | | | (133) | |
Total other comprehensive income (loss), net of tax | 15 | | | 54 | | | 94 | | | (475) | |
Comprehensive income (loss) | 2,074 | | | 368 | | | 3,223 | | | (17) | |
Dividends on redeemable non-controlling interests | (1) | | | (1) | | | (3) | | | (3) | |
| | | | | | | |
Comprehensive income (loss) attributable to the Company shareholders | $ | 2,073 | | | $ | 367 | | | $ | 3,220 | | | $ | (20) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
Net income | $ | 1,644 | | | $ | 2,059 | | | $ | 2,964 | | | $ | 3,129 | |
Other comprehensive income (loss), net of tax – | | | | | | | |
Financial derivatives | 102 | | | (78) | | | 190 | | | 97 | |
Unrealized losses on available-for-sale debt securities | — | | | (1) | | | — | | | (1) | |
Defined benefit pension and other postretirement benefit plans | 78 | | | 17 | | | 83 | | | 28 | |
Foreign currency translations | (161) | | | 77 | | | (186) | | | (30) | |
Total other comprehensive income, net of tax | 19 | | | 15 | | | 87 | | | 94 | |
Comprehensive income | 1,663 | | | 2,074 | | | 3,051 | | | 3,223 | |
Dividends on redeemable non-controlling interests | (1) | | | (1) | | | (3) | | | (3) | |
| | | | | | | |
Comprehensive income attributable to the Company shareholders | $ | 1,662 | | | $ | 2,073 | | | $ | 3,048 | | | $ | 3,220 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars | Millions of dollars | June 30, 2021 | | December 31, 2020 | Millions of dollars | June 30, 2022 | | December 31, 2021 |
ASSETS | ASSETS | | | | ASSETS | | | |
Current assets: | Current assets: | | Current assets: | |
Cash and cash equivalents | Cash and cash equivalents | $ | 1,381 | | | $ | 1,763 | | Cash and cash equivalents | $ | 1,057 | | | $ | 1,472 | |
Restricted cash | Restricted cash | 2 | | | 2 | | Restricted cash | 9 | | | 5 | |
Short-term investments | Short-term investments | 136 | | | 702 | | Short-term investments | — | | | 9 | |
Accounts receivable: | Accounts receivable: | | Accounts receivable: | |
Trade, net | Trade, net | 4,707 | | | 3,291 | | Trade, net | 5,148 | | | 4,565 | |
Related parties | Related parties | 190 | | | 150 | | Related parties | 259 | | | 243 | |
Inventories | Inventories | 4,840 | | | 4,344 | | Inventories | 5,097 | | | 4,901 | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets | 1,641 | | | 1,382 | | Prepaid expenses and other current assets | 1,275 | | | 1,022 | |
Total current assets | Total current assets | 12,897 | | | 11,634 | | Total current assets | 12,845 | | | 12,217 | |
Operating lease assets | Operating lease assets | 1,634 | | | 1,492 | | Operating lease assets | 1,863 | | | 1,946 | |
Property, plant and equipment | Property, plant and equipment | 22,176 | | | 21,484 | | Property, plant and equipment | 22,664 | | | 22,382 | |
Less: Accumulated depreciation | Less: Accumulated depreciation | (7,531) | | | (7,098) | | Less: Accumulated depreciation | (7,923) | | | (7,826) | |
Property, plant and equipment, net | Property, plant and equipment, net | 14,645 | | | 14,386 | | Property, plant and equipment, net | 14,741 | | | 14,556 | |
Equity investments | Equity investments | 4,902 | | | 4,729 | | Equity investments | 4,544 | | | 4,786 | |
Goodwill | Goodwill | 1,931 | | | 1,953 | | Goodwill | 1,793 | | | 1,875 | |
Intangible assets, net | Intangible assets, net | 677 | | | 751 | | Intangible assets, net | 621 | | | 695 | |
Other assets | Other assets | 573 | | | 458 | | Other assets | 617 | | | 667 | |
Total assets | Total assets | $ | 37,259 | | | $ | 35,403 | | Total assets | $ | 37,024 | | | $ | 36,742 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars, except shares and par value data | Millions of dollars, except shares and par value data | June 30, 2021 | | December 31, 2020 | Millions of dollars, except shares and par value data | June 30, 2022 | | December 31, 2021 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | | | | LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | | | |
Current liabilities: | Current liabilities: | | Current liabilities: | |
Current maturities of long-term debt | Current maturities of long-term debt | $ | 8 | | | $ | 8 | | Current maturities of long-term debt | $ | 8 | | | $ | 6 | |
Short-term debt | Short-term debt | 683 | | | 663 | | Short-term debt | 405 | | | 362 | |
Accounts payable: | Accounts payable: | | Accounts payable: | |
Trade | Trade | 2,909 | | | 2,398 | | Trade | 4,103 | | | 3,460 | |
Related parties | Related parties | 577 | | | 550 | | Related parties | 703 | | | 831 | |
Accrued liabilities | Accrued liabilities | 2,418 | | | 1,883 | | Accrued liabilities | 2,434 | | | 2,571 | |
Total current liabilities | Total current liabilities | 6,595 | | | 5,502 | | Total current liabilities | 7,653 | | | 7,230 | |
Long-term debt | Long-term debt | 13,482 | | | 15,286 | | Long-term debt | 11,062 | | | 11,246 | |
Operating lease liabilities | Operating lease liabilities | 1,364 | | | 1,222 | | Operating lease liabilities | 1,569 | | | 1,649 | |
Other liabilities | Other liabilities | 2,657 | | | 2,957 | | Other liabilities | 1,939 | | | 2,295 | |
Deferred income taxes | Deferred income taxes | 2,507 | | | 2,332 | | Deferred income taxes | 2,441 | | | 2,334 | |
Commitments and contingencies | Commitments and contingencies | 0 | | 0 | Commitments and contingencies | 0 | | 0 |
Redeemable non-controlling interests | Redeemable non-controlling interests | 116 | | | 116 | | Redeemable non-controlling interests | 116 | | | 116 | |
Shareholders’ equity: | Shareholders’ equity: | | Shareholders’ equity: | |
Ordinary shares, €0.04 par value, 1,275 million shares authorized, 334,503,518 and 334,015,220 shares outstanding, respectively | 19 | | | 19 | | |
Ordinary shares, €0.04 par value, 1,275 million shares authorized, 327,244,650 and 329,536,389 shares outstanding, respectively | | Ordinary shares, €0.04 par value, 1,275 million shares authorized, 327,244,650 and 329,536,389 shares outstanding, respectively | 19 | | | 19 | |
Additional paid-in capital | Additional paid-in capital | 6,011 | | | 5,986 | | Additional paid-in capital | 6,077 | | | 6,044 | |
Retained earnings | Retained earnings | 6,837 | | | 4,440 | | Retained earnings | 9,050 | | | 8,563 | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (1,849) | | | (1,943) | | Accumulated other comprehensive loss | (1,716) | | | (1,803) | |
Treasury stock, at cost, 5,590,138 and 6,030,408 ordinary shares, respectively | (494) | | | (531) | | |
Treasury stock, at cost, 13,092,354 and 10,675,605 ordinary shares, respectively | | Treasury stock, at cost, 13,092,354 and 10,675,605 ordinary shares, respectively | (1,200) | | | (965) | |
Total Company share of shareholders’ equity | Total Company share of shareholders’ equity | 10,524 | | | 7,971 | | Total Company share of shareholders’ equity | 12,230 | | | 11,858 | |
Non-controlling interests | Non-controlling interests | 14 | | | 17 | | Non-controlling interests | 14 | | | 14 | |
Total equity | Total equity | 10,538 | | | 7,988 | | Total equity | 12,244 | | | 11,872 | |
Total liabilities, redeemable non-controlling interests and equity | Total liabilities, redeemable non-controlling interests and equity | $ | 37,259 | | | $ | 35,403 | | Total liabilities, redeemable non-controlling interests and equity | $ | 37,024 | | | $ | 36,742 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | Six Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | Millions of dollars | 2022 | | 2021 |
Cash flows from operating activities: | Cash flows from operating activities: | | | | Cash flows from operating activities: | | | |
Net income | Net income | $ | 3,129 | | | $ | 458 | | Net income | 2,964 | | | $ | 3,129 | |
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | |
Depreciation and amortization | Depreciation and amortization | 665 | | | 698 | | Depreciation and amortization | 615 | | | 665 | |
| Impairments | | Impairments | 69 | | | — | |
Amortization of debt-related costs | Amortization of debt-related costs | 13 | | | 7 | | Amortization of debt-related costs | 8 | | | 13 | |
| Share-based compensation | Share-based compensation | 35 | | | 29 | | Share-based compensation | 37 | | | 35 | |
Inventory valuation charges | 0 | | | 323 | | |
| Equity investments— | Equity investments— | | Equity investments— | |
Equity income | Equity income | (285) | | | (61) | | Equity income | (51) | | | (285) | |
Distributions of earnings, net of tax | Distributions of earnings, net of tax | 142 | | | 81 | | Distributions of earnings, net of tax | 184 | | | 142 | |
| Deferred income tax (benefit) provision | 34 | | | (90) | | |
Deferred income tax provision | | Deferred income tax provision | 68 | | | 34 | |
| Changes in assets and liabilities that provided (used) cash: | Changes in assets and liabilities that provided (used) cash: | | Changes in assets and liabilities that provided (used) cash: | |
Accounts receivable | Accounts receivable | (1,502) | | | 487 | | Accounts receivable | (829) | | | (1,502) | |
Inventories | Inventories | (541) | | | 463 | | Inventories | (415) | | | (541) | |
Accounts payable | Accounts payable | 482 | | | (485) | | Accounts payable | 750 | | | 482 | |
Other, net | Other, net | 301 | | | (76) | | Other, net | (299) | | | 301 | |
Net cash provided by operating activities | Net cash provided by operating activities | 2,473 | | | 1,834 | | Net cash provided by operating activities | 3,101 | | | 2,473 | |
Cash flows from investing activities: | Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Expenditures for property, plant and equipment | Expenditures for property, plant and equipment | (771) | | | (1,248) | | Expenditures for property, plant and equipment | (978) | | | (771) | |
| Purchases of available-for-sale debt securities | 0 | | | (270) | | |
| Proceeds from maturities of available-for-sale debt securities | Proceeds from maturities of available-for-sale debt securities | 291 | | | 0 | | Proceeds from maturities of available-for-sale debt securities | — | | | 291 | |
| Purchases of equity securities | 0 | | | (184) | | |
| Proceeds from equity securities | Proceeds from equity securities | 264 | | | 1 | | Proceeds from equity securities | 8 | | | 264 | |
Acquisition of equity method investment | Acquisition of equity method investment | (104) | | | 0 | | Acquisition of equity method investment | — | | | (104) | |
| Other, net | Other, net | (42) | | | (26) | | Other, net | (64) | | | (42) | |
Net cash used in investing activities | Net cash used in investing activities | (362) | | | (1,727) | | Net cash used in investing activities | (1,034) | | | (362) | |
Cash flows from financing activities: | Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
Repurchases of Company ordinary shares | Repurchases of Company ordinary shares | 0 | | | (4) | | Repurchases of Company ordinary shares | (262) | | | — | |
Dividends paid - common stock | Dividends paid - common stock | (730) | | | (701) | | Dividends paid - common stock | (2,464) | | | (730) | |
Purchase of non-controlling interest | 0 | | | (30) | | |
Issuance of long-term debt | 0 | | | 2,492 | | |
Payments of debt issuance costs | 0 | | | (18) | | |
| Repayments of long-term debt | Repayments of long-term debt | (1,775) | | | (500) | | Repayments of long-term debt | — | | | (1,775) | |
Debt extinguishment costs | Debt extinguishment costs | (23) | | | 0 | | Debt extinguishment costs | — | | | (23) | |
Issuance of short-term debt | 0 | | | 521 | | |
Repayments of short-term debt | 0 | | | (500) | | |
| Net proceeds from commercial paper | Net proceeds from commercial paper | 0 | | | 212 | | Net proceeds from commercial paper | 105 | | | — | |
Collateral received from (paid for) interest rate derivatives | 51 | | | (238) | | |
Collateral received from interest rate derivatives | | Collateral received from interest rate derivatives | 217 | | | 51 | |
| Proceeds from settlement of cash flow hedges | 0 | | | 346 | | |
| | Other, net | Other, net | 7 | | | (12) | | Other, net | 12 | | | 7 | |
Net cash (used in) provided by financing activities | (2,470) | | | 1,568 | | |
Net cash used in financing activities | | Net cash used in financing activities | (2,392) | | | (2,470) | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | (23) | | | 15 | | Effect of exchange rate changes on cash | (86) | | | (23) | |
(Decrease) increase in cash and cash equivalents and restricted cash | (382) | | | 1,690 | | |
Decrease in cash and cash equivalents and restricted cash | | Decrease in cash and cash equivalents and restricted cash | (411) | | | (382) | |
Cash and cash equivalents and restricted cash at beginning of period | Cash and cash equivalents and restricted cash at beginning of period | 1,765 | | | 888 | | Cash and cash equivalents and restricted cash at beginning of period | 1,477 | | | 1,765 | |
Cash and cash equivalents and restricted cash at end of period | Cash and cash equivalents and restricted cash at end of period | $ | 1,383 | | | $ | 2,578 | | Cash and cash equivalents and restricted cash at end of period | $ | 1,066 | | | $ | 1,383 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests |
Millions of dollars | Millions of dollars | Issued | | Treasury | | Millions of dollars | Issued | | Treasury | |
Balance, March 31, 2021 | $ | 19 | | | $ | (506) | | | $ | 5,993 | | | $ | 5,158 | | | $ | (1,864) | | | $ | 8,800 | | | $ | 14 | | |
Balance, March 31, 2022 | | Balance, March 31, 2022 | $ | 19 | | | $ | (1,156) | | | $ | 6,056 | | | $ | 9,514 | | | $ | (1,735) | | | $ | 12,698 | | | $ | 14 | |
Net income | Net income | 0 | | | 0 | | | 0 | | | 2,059 | | | 0 | | | 2,059 | | | 0 | | Net income | — | | | — | | | — | | | 1,644 | | | — | | | 1,644 | | | — | |
Other comprehensive income | Other comprehensive income | 0 | | | 0 | | | 0 | | | 0 | | | 15 | | | 15 | | | 0 | | Other comprehensive income | — | | | — | | | — | | | — | | | 19 | | | 19 | | | — | |
Share-based compensation | Share-based compensation | 0 | | | 12 | | | 18 | | | (1) | | | 0 | | | 29 | | | 0 | | Share-based compensation | — | | | 10 | | | 21 | | | (14) | | | — | | | 17 | | | — | |
Dividends - common stock ($1.13 per share) | 0 | | | 0 | | | 0 | | | (378) | | | 0 | | | (378) | | | 0 | | |
Dividends - common stock ($1.19 per share) | | Dividends - common stock ($1.19 per share) | — | | | — | | | — | | | (389) | | | — | | | (389) | | | — | |
Special dividends - common stock ($5.20 per share) | | Special dividends - common stock ($5.20 per share) | — | | | — | | | — | | | (1,704) | | | — | | | (1,704) | | | — | |
Dividends - redeemable non-controlling interests ($15.00 per share) | Dividends - redeemable non-controlling interests ($15.00 per share) | 0 | | | 0 | | | 0 | | | (1) | | | 0 | | | (1) | | | 0 | | Dividends - redeemable non-controlling interests ($15.00 per share) | — | | | — | | | — | | | (1) | | | — | | | (1) | | | — | |
Repurchases of Company ordinary shares | | Repurchases of Company ordinary shares | — | | | (54) | | | — | | | — | | | — | | | (54) | | | — | |
| Balance, June 30, 2021 | $ | 19 | | | $ | (494) | | | $ | 6,011 | | | $ | 6,837 | | | $ | (1,849) | | | $ | 10,524 | | | $ | 14 | | |
Balance, June 30, 2022 | | Balance, June 30, 2022 | $ | 19 | | | $ | (1,200) | | | $ | 6,077 | | | $ | 9,050 | | | $ | (1,716) | | | $ | 12,230 | | | $ | 14 | |
| | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests |
Millions of dollars | Millions of dollars | Issued | | Treasury | | Millions of dollars | Issued | | Treasury | |
Balance, March 31, 2020 | $ | 19 | | | $ | (559) | | | $ | 5,950 | | | $ | 4,227 | | | $ | (2,313) | | | $ | 7,324 | | | $ | 19 | | |
Balance, March 31, 2021 | | Balance, March 31, 2021 | $ | 19 | | | $ | (506) | | | $ | 5,993 | | | $ | 5,158 | | | $ | (1,864) | | | $ | 8,800 | | | $ | 14 | |
Net income | Net income | 0 | | | 0 | | | 0 | | | 314 | | | 0 | | | 314 | | | 0 | | Net income | — | | | — | | | — | | | 2,059 | | | — | | | 2,059 | | | — | |
Other comprehensive income | Other comprehensive income | 0 | | | 0 | | | 0 | | | 0 | | | 54 | | | 54 | | | 0 | | Other comprehensive income | — | | | — | | | — | | | — | | | 15 | | | 15 | | | — | |
Share-based compensation | Share-based compensation | 0 | | | 11 | | | 8 | | | (2) | | | 0 | | | 17 | | | 0 | | Share-based compensation | — | | | 12 | | | 18 | | | (1) | | | — | | | 29 | | | — | |
Dividends - common stock ($1.05 per share) | 0 | | | 0 | | | 0 | | | (350) | | | 0 | | | (350) | | | 0 | | |
Dividends - common stock ($1.13 per share) | | Dividends - common stock ($1.13 per share) | — | | | — | | | — | | | (378) | | | — | | | (378) | | | — | |
Dividends - redeemable non-controlling interests ($15.00 per share) | Dividends - redeemable non-controlling interests ($15.00 per share) | 0 | | | 0 | | | 0 | | | (1) | | | 0 | | | (1) | | | 0 | | Dividends - redeemable non-controlling interests ($15.00 per share) | — | | | — | | | — | | | (1) | | | — | | | (1) | | | — | |
| Balance, June 30, 2020 | $ | 19 | | | $ | (548) | | | $ | 5,958 | | | $ | 4,188 | | | $ | (2,259) | | | $ | 7,358 | | | $ | 19 | | |
Balance, June 30, 2021 | | Balance, June 30, 2021 | $ | 19 | | | $ | (494) | | | $ | 6,011 | | | $ | 6,837 | | | $ | (1,849) | | | $ | 10,524 | | | $ | 14 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests | | Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests |
Millions of dollars | Millions of dollars | Issued | | Treasury | | Millions of dollars | Issued | | Treasury | |
Balance, December 31, 2020 | $ | 19 | | | $ | (531) | | | $ | 5,986 | | | $ | 4,440 | | | $ | (1,943) | | | $ | 7,971 | | | $ | 17 | | |
Balance, December 31, 2021 | | Balance, December 31, 2021 | $ | 19 | | | $ | (965) | | | $ | 6,044 | | | $ | 8,563 | | | $ | (1,803) | | | $ | 11,858 | | | $ | 14 | |
Net income | Net income | 0 | | | 0 | | | 0 | | | 3,129 | | | 0 | | | 3,129 | | | 0 | | Net income | — | | | — | | | — | | | 2,964 | | | — | | | 2,964 | | | — | |
Other comprehensive income | Other comprehensive income | 0 | | | 0 | | | 0 | | | 0 | | | 94 | | | 94 | | | 0 | | Other comprehensive income | — | | | — | | | — | | | — | | | 87 | | | 87 | | | — | |
Share-based compensation | Share-based compensation | 0 | | | 37 | | | 25 | | | 1 | | | 0 | | | 63 | | | 0 | | Share-based compensation | — | | | 21 | | | 33 | | | (10) | | | — | | | 44 | | | — | |
Dividends - common stock ($2.18 per share) | 0 | | | 0 | | | 0 | | | (730) | | | 0 | | | (730) | | | 0 | | |
Dividends - common stock ($2.32 per share) | | Dividends - common stock ($2.32 per share) | — | | | — | | | — | | | (760) | | | — | | | (760) | | | — | |
Special dividends - common stock ($5.20 per share) | | Special dividends - common stock ($5.20 per share) | — | | | — | | | — | | | (1,704) | | | — | | | (1,704) | | | — | |
Dividends - redeemable non-controlling interests ($30.00 per share) | Dividends - redeemable non-controlling interests ($30.00 per share) | 0 | | | 0 | | | 0 | | | (3) | | | 0 | | | (3) | | | 0 | | Dividends - redeemable non-controlling interests ($30.00 per share) | — | | | — | | | — | | | (3) | | | — | | | (3) | | | — | |
Sales of non-controlling interest | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | (3) | | |
Repurchases of Company ordinary shares | | Repurchases of Company ordinary shares | — | | | (256) | | | — | | | — | | | — | | | (256) | | | — | |
| Balance, June 30, 2021 | $ | 19 | | | $ | (494) | | | $ | 6,011 | | | $ | 6,837 | | | $ | (1,849) | | | $ | 10,524 | | | $ | 14 | | |
Balance, June 30, 2022 | | Balance, June 30, 2022 | $ | 19 | | | $ | (1,200) | | | $ | 6,077 | | | $ | 9,050 | | | $ | (1,716) | | | $ | 12,230 | | | $ | 14 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests |
Millions of dollars | Issued | | Treasury | |
Balance, December 31, 2019 | $ | 19 | | | $ | (580) | | | $ | 5,954 | | | $ | 4,435 | | | $ | (1,784) | | | $ | 8,044 | | | $ | 19 | |
Net income | 0 | | | 0 | | | 0 | | | 458 | | | 0 | | | 458 | | | 0 | |
Other comprehensive loss | 0 | | | 0 | | | 0 | | | 0 | | | (475) | | | (475) | | | 0 | |
Share-based compensation | 0 | | | 36 | | | (3) | | | (1) | | | 0 | | | 32 | | | 0 | |
Dividends - common stock ($2.10 per share) | 0 | | | 0 | | | 0 | | | (701) | | | 0 | | | (701) | | | 0 | |
Dividends - redeemable non-controlling interests ($30.00 per share) | 0 | | | 0 | | | 0 | | | (3) | | | 0 | | | (3) | | | 0 | |
Repurchases of Company ordinary shares | 0 | | | (4) | | | 0 | | | 0 | | | 0 | | | (4) | | | 0 | |
Purchase of non-controlling interest | 0 | | | 0 | | | 7 | | | 0 | | | 0 | | | 7 | | | 0 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Balance, June 30, 2020 | $ | 19 | | | $ | (548) | | | $ | 5,958 | | | $ | 4,188 | | | $ | (2,259) | | | $ | 7,358 | | | $ | 19 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary Shares | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Company Share of Shareholders’ Equity | | Non- Controlling Interests |
Millions of dollars | Issued | | Treasury | |
Balance, December 31, 2020 | $ | 19 | | | $ | (531) | | | $ | 5,986 | | | $ | 4,440 | | | $ | (1,943) | | | $ | 7,971 | | | $ | 17 | |
Net income | — | | | — | | | — | | | 3,129 | | | — | | | 3,129 | | | — | |
Other comprehensive income | — | | | — | | | — | | | — | | | 94 | | | 94 | | | — | |
Share-based compensation | — | | | 37 | | | 25 | | | 1 | | | — | | | 63 | | | — | |
Dividends - common stock ($2.18 per share) | — | | | — | | | — | | | (730) | | | — | | | (730) | | | — | |
Dividends - redeemable non-controlling interests ($30.00 per share) | — | | | — | | | — | | | (3) | | | — | | | (3) | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Sales of non-controlling interest | — | | | — | | | — | | | — | | | — | | | — | | | (3) | |
Balance, June 30, 2021 | $ | 19 | | | $ | (494) | | | $ | 6,011 | | | $ | 6,837 | | | $ | (1,849) | | | $ | 10,524 | | | $ | 14 | |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
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LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
LyondellBasell Industries N.V. is a limited liability company (Naamloze Vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009. Unless otherwise indicated, the “Company,” “we,” “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).
LyondellBasell N.V. is a worldwide manufacturer of chemicals and polymers, a refiner of crude oil, a significant producer of gasoline blending components and a developer and licensor of technologies for the production of polymers.
The accompanying unaudited Consolidated Financial Statements have been prepared from the books and records of LyondellBasell N.V. in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. In our opinion, all adjustments, including normal recurring adjustments, considered necessary for a fair statement have been included. The results for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement have been included. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The results for interim periods are not necessarily indicative of results for the entire year.
2. Accounting and Reporting Changes
Recently Adopted Guidance
The following table provides a brief description of recently adoptedThere were no new standards or Accounting Standard Updates (“ASU”) issued byadopted during the Financial Accounting Standards Board (“FASB”):
| | | | | | | | | | |
Standard | | Description | | |
| | | | |
ASU 2020-01, Clarifying the Interactions between Topic 321, Topic 323, Equity Method and Joint Ventures, and Topic 815, Derivatives and Hedging
| | This guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 and includes scope considerations for entities that hold certain non-derivative forward contracts and purchased options to acquire equity securities that, upon settlement of the forward contract or exercise of the purchase option, would be accounted for under the equity method of accounting. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.
The prospective adoption of this guidance from January 1, 2021 did not havesix months ended June 30, 2022 that had a material impact on our Consolidated Financial Statements. | | |
ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity
| | This guidance simplifies the accounting for convertible instruments and the application of the derivatives scope exception for contracts in an entity’s own equity. The standard also amends the accounting for convertible instruments in the diluted earnings per share calculation and requires enhanced disclosures of convertible instruments and contracts in an entity’s own equity. The guidance is effective for fiscal years beginning after December 15, 2021 and may be applied on a modified or fully retrospective basis.
The early adoption of this guidance on a modified retrospective basis from January 1, 2021 did not have a material impact on our Consolidated Financial Statements.
| | |
| | | | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| | | | | | | | | | |
Standard | | Description | | |
| | | | |
ASU 2020-09, Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762
| | This guidance amends and supersedes SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No. 33-10762 related to financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities and affiliates whose securities are pledged as collateral for registered securities. The guidance is effective for annual and interim periods ending after January 4, 2021.
The adoption of this guidance from January 1, 2021 did not have a material impact on our Consolidated Financial Statements.
| | |
Accounting Guidance Issued But Not Adopted as of June 30, 20212022
There are no ASUsGovernment Assistance—In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The guidance requires disclosures about assistance received from the government that have been accounted for by analogizing to a grant or contribution accounting model including the nature and form of assistance, the accounting policies used to account for the assistance and its impact on the entity’s financial statements. The guidance is effective for annual periods beginning after December 15, 2021, with early application permitted. The adoption of this guidance will not yet adopted that could have a material impact on our Consolidated Financial Statements.
Fair Value Measurement—In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security because it is a characteristic of the entity holding the equity security rather than a characteristic of the security and is not considered in measuring its fair value. The guidance is effective prospectively for the year ending December 31, 2024 including the interim periods, with the impact of adoption reflected in earnings. Early adoption is permitted. We are in the process of the assessing the impact of the new guidance on our Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
3. Revenues
Contract Balances—Contract liabilities were $181$196 million and $194$169 million at June 30, 20212022 and December 31, 2020,2021, respectively. Revenue recognized in each reporting period, included in the contract liability balance at the beginning of the period, was immaterial.
Disaggregation of Revenues—The following table presents our revenues disaggregated by key products:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
Sales and other operating revenues: | Sales and other operating revenues: | | | | | | | | Sales and other operating revenues: | | | | | | | |
Olefins and co-products | Olefins and co-products | $ | 1,185 | | | $ | 460 | | | $ | 2,276 | | | $ | 1,127 | | Olefins and co-products | $ | 1,397 | | | $ | 1,185 | | | $ | 2,554 | | | $ | 2,276 | |
Polyethylene | Polyethylene | 2,611 | | | 1,277 | | | 4,764 | | | 2,736 | | Polyethylene | 2,724 | | | 2,611 | | | 5,408 | | | 4,764 | |
Polypropylene | Polypropylene | 1,996 | | | 969 | | | 3,714 | | | 2,070 | | Polypropylene | 1,903 | | | 1,996 | | | 3,917 | | | 3,714 | |
Propylene oxide and derivatives | Propylene oxide and derivatives | 725 | | | 332 | | | 1,227 | | | 796 | | Propylene oxide and derivatives | 931 | | | 725 | | | 1,816 | | | 1,227 | |
Oxyfuels and related products | Oxyfuels and related products | 838 | | | 389 | | | 1,445 | | | 1,096 | | Oxyfuels and related products | 1,553 | | | 838 | | | 2,807 | | | 1,445 | |
Intermediate chemicals | Intermediate chemicals | 948 | | | 404 | | | 1,526 | | | 948 | | Intermediate chemicals | 1,201 | | | 948 | | | 2,311 | | | 1,526 | |
Compounding and solutions | Compounding and solutions | 1,077 | | | 549 | | | 2,115 | | | 1,461 | | Compounding and solutions | 1,113 | | | 1,077 | | | 2,248 | | | 2,115 | |
Advanced polymers | Advanced polymers | 256 | | | 151 | | | 487 | | | 332 | | Advanced polymers | 310 | | | 256 | | | 582 | | | 487 | |
Refined products | Refined products | 1,741 | | | 855 | | | 2,734 | | | 2,191 | | Refined products | 3,503 | | | 1,741 | | | 5,961 | | | 2,734 | |
Other | Other | 184 | | | 160 | | | 355 | | | 283 | | Other | 203 | | | 184 | | | 391 | | | 355 | |
Total | Total | $ | 11,561 | | | $ | 5,546 | | | $ | 20,643 | | | $ | 13,040 | | Total | $ | 14,838 | | | $ | 11,561 | | | $ | 27,995 | | | $ | 20,643 | |
The following table presents our revenues disaggregated by geography, based upon the location of the customer:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
Sales and other operating revenues: | | | | | | | |
United States | $ | 7,425 | | | $ | 5,616 | | | $ | 13,499 | | | $ | 9,702 | |
Germany | 1,075 | | | 934 | | | 2,070 | | | 1,699 | |
China | 686 | | | 561 | | | 1,342 | | | 1,121 | |
Mexico | 598 | | | 390 | | | 1,040 | | | 637 | |
Italy | 521 | | | 472 | | | 1,039 | | | 850 | |
Japan | 461 | | | 331 | | | 884 | | | 561 | |
France | 446 | | | 366 | | | 833 | | | 656 | |
Poland | 374 | | | 271 | | | 769 | | | 541 | |
The Netherlands | 344 | | | 346 | | | 734 | | | 616 | |
Other | 2,908 | | | 2,274 | | | 5,785 | | | 4,260 | |
Total | $ | 14,838 | | | $ | 11,561 | | | $ | 27,995 | | | $ | 20,643 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The following table presents our revenues disaggregated by geography, based upon the location of the customer:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 |
Sales and other operating revenues: | | | | | | | |
United States | $ | 5,616 | | | $ | 2,417 | | | $ | 9,702 | | | $ | 5,604 | |
Germany | 934 | | | 398 | | | 1,699 | | | 1,039 | |
China | 561 | | | 302 | | | 1,121 | | | 545 | |
Italy | 472 | | | 259 | | | 850 | | | 594 | |
France | 366 | | | 161 | | | 656 | | | 431 | |
Mexico | 390 | | | 203 | | | 637 | | | 583 | |
The Netherlands | 346 | | | 153 | | | 616 | | | 365 | |
Japan | 331 | | | 143 | | | 561 | | | 478 | |
Poland | 271 | | | 188 | | | 541 | | | 412 | |
Other | 2,274 | | | 1,322 | | | 4,260 | | | 2,989 | |
Total | $ | 11,561 | | | $ | 5,546 | | | $ | 20,643 | | | $ | 13,040 | |
4. Accounts Receivable
Our accounts receivable are reflected in the Consolidated Balance Sheets, net of allowance for credit losses of $7$5 million and $15$6 million atas of June 30, 20212022 and December 31, 2020,2021, respectively.
5. Inventories
Inventories consisted of the following components:
| | | | | | | | | | | |
Millions of dollars | June 30, 2021 | | December 31, 2020 |
Finished goods | $ | 3,168 | | | $ | 2,816 | |
Work-in-process | 197 | | | 144 | |
Raw materials and supplies | 1,475 | | | 1,384 | |
Total inventories | $ | 4,840 | | | $ | 4,344 | |
Our inventories are stated at the lower of cost or market (“LCM”). Cost is determined using the last-in, first-out (“LIFO”) inventory valuation methodology, which means that the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, and as a result we adjust the value of inventory to market value. Fluctuations in the prices of crude oil, natural gas and correlated products from period to period may result in the recognition of charges to adjust the value of inventory to the LCM in periods of falling prices and the reversal of those charges in subsequent interim periods, within the fiscal year, as market prices recover.
During the first six months of 2020, we recognized an LCM inventory valuation charge of $323 million related to the decline in pricing for many of our raw material and finished goods inventories since December 31, 2019. During the second quarter of 2020, we recognized a LCM inventory valuation benefit of $96 million, largely driven by the recovery of market prices of crude oil and refined products during the second quarter. | | | | | | | | | | | |
Millions of dollars | June 30, 2022 | | December 31, 2021 |
Finished goods | $ | 3,298 | | | $ | 3,329 | |
Work-in-process | 219 | | | 178 | |
Raw materials and supplies | 1,580 | | | 1,394 | |
Total inventories | $ | 5,097 | | | $ | 4,901 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
6. Debt
Long-term loans, notes and other debt, net of unamortized discount and debt issuance cost, consisted of the following:
| | | | | | | | | | | |
Millions of dollars | June 30, 2021 | | December 31, 2020 |
Senior Notes due 2024, $1,000 million, 5.75% ($3 million of debt issuance cost) | $ | 997 | | | $ | 996 | |
Senior Notes due 2055, $1,000 million, 4.625% ($15 million of discount; $11 million of debt issuance cost) | 974 | | | 974 | |
Term Loan due 2022, $4,000 million | 0 | | | 1,448 | |
| | | |
Guaranteed Notes due 2023, $750 million, 4.0% ($1 million of discount; $1 million of debt issuance cost) | 423 | | | 745 | |
Guaranteed Floating Rate Notes due 2023, $650 million ($3 million of debt issuance cost) | 647 | | | 646 | |
Guaranteed Notes due 2025, $500 million, 2.875% ($3 million of debt issuance cost) | 497 | | | 496 | |
Guaranteed Notes due 2025, $500 million, 1.25% ($1 million of discount; $4 million of debt issuance cost) | 495 | | | 495 | |
Guaranteed Notes due 2026, €500 million, 0.875% ($1 million of discount; $3 million of debt issuance cost) | 591 | | | 608 | |
Guaranteed Notes due 2027, $1,000 million, 3.5% ($6 million of discount; $5 million of debt issuance cost) | 1,084 | | | 1,090 | |
Guaranteed Notes due 2027, $300 million, 8.1% | 300 | | | 300 | |
Guaranteed Notes due 2030, $500 million, 3.375% ($1 million of discount; $3 million of debt issuance cost) | 500 | | | 495 | |
Guaranteed Notes due 2030, $500 million, 2.25% ($4 million of discount; $4 million of debt issuance cost) | 492 | | | 492 | |
Guaranteed Notes due 2031, €500 million, 1.625% ($6 million of discount; $3 million of debt issuance cost) | 585 | | | 602 | |
Guaranteed Notes due 2040, $750 million, 3.375% ($2 million of discount; $8 million of debt issuance cost) | 740 | | | 740 | |
Guaranteed Notes due 2043, $750 million, 5.25% ($19 million of discount; $7 million of debt issuance cost) | 724 | | | 723 | |
Guaranteed Notes due 2044, $1,000 million, 4.875% ($10 million of discount; $9 million of debt issuance cost) | 981 | | | 981 | |
Guaranteed Notes due 2049, $1,000 million, 4.2% ($15 million of discount; $10 million of debt issuance cost) | 975 | | | 975 | |
Guaranteed Notes due 2050, $1,000 million, 4.2% ($6 million of discount; $10 million of debt issuance cost) | 984 | | | 984 | |
Guaranteed Notes due 2051, $1,000 million, 3.625% ($3 million of discount; $11 million of debt issuance cost) | 986 | | | 986 | |
Guaranteed Notes due 2060, $500 million, 3.8% ($4 million of discount; $6 million of debt issuance cost) | 490 | | | 490 | |
Other | 25 | | | 28 | |
Total | 13,490 | | | 15,294 | |
Less current maturities | (8) | | | (8) | |
Long-term debt | $ | 13,482 | | | $ | 15,286 | |
| | | | | | | | | | | |
Millions of dollars | June 30, 2022 | | December 31, 2021 |
Senior Notes due 2024, $1,000 million, 5.75% ($2 million of debt issuance cost) | $ | 773 | | | $ | 773 | |
Senior Notes due 2055, $1,000 million, 4.625% ($15 million of discount; $11 million of debt issuance cost) | 974 | | | 974 | |
Guaranteed Notes due 2027, $300 million, 8.1% | 300 | | | 300 | |
Issued by LYB International Finance B.V.: |
Guaranteed Notes due 2023, $750 million, 4.0% ($1 million of discount) | 424 | | | 423 | |
Guaranteed Notes due 2043, $750 million, 5.25% ($19 million of discount; $7 million of debt issuance cost) | 724 | | | 724 | |
Guaranteed Notes due 2044, $1,000 million, 4.875% ($10 million of discount; $9 million of debt issuance cost) | 981 | | | 981 | |
Issued by LYB International Finance II B.V.: |
Guaranteed Notes due 2026, €500 million, 0.875% ($1 million of discount; $3 million of debt issuance cost) | 508 | | | 562 | |
Guaranteed Notes due 2027, $1,000 million, 3.5% ($3 million of discount; $2 million of debt issuance cost) | 603 | | | 631 | |
Guaranteed Notes due 2031, €500 million, 1.625% ($5 million of discount; $3 million of debt issuance cost) | 509 | | | 558 | |
Issued by LYB International Finance III LLC: |
Guaranteed Notes due 2025, $500 million, 1.25% ($1 million of discount; $3 million of debt issuance cost) | 478 | | | 486 | |
Guaranteed Notes due 2030, $500 million, 3.375% ($1 million of debt issuance cost) | 127 | | | 143 | |
Guaranteed Notes due 2030, $500 million, 2.25% ($3 million of discount; $4 million of debt issuance cost) | 475 | | | 490 | |
Guaranteed Notes due 2040, $750 million, 3.375% ($2 million of discount; $7 million of debt issuance cost) | 741 | | | 741 | |
Guaranteed Notes due 2049, $1,000 million, 4.2% ($14 million of discount; $10 million of debt issuance cost) | 976 | | | 975 | |
Guaranteed Notes due 2050, $1,000 million, 4.2% ($6 million of discount; $10 million of debt issuance cost) | 974 | | | 981 | |
Guaranteed Notes due 2051, $1,000 million, 3.625% ($3 million of discount; $11 million of debt issuance cost) | 933 | | | 986 | |
Guaranteed Notes due 2060, $500 million, 3.8% ($4 million of discount; $6 million of debt issuance cost) | 488 | | | 490 | |
Other | 82 | | | 34 | |
Total | 11,070 | | | 11,252 | |
Less current maturities | (8) | | | (6) | |
Long-term debt | $ | 11,062 | | | $ | 11,246 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Fair value hedging adjustments associated with the fair value hedge accounting of our fixed-for-floating interest rate swaps for the applicable periods are as follows:
| | | | | Gains (Losses) | | Cumulative Fair Value Hedging Adjustments Included in Carrying Amount of Debt | | Gains (Losses) | | Cumulative Fair Value Hedging Adjustments Included in Carrying Amount of Debt |
| | Inception Year | | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | December 31, | | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | December 31, |
Millions of dollars | Millions of dollars | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
Senior Notes due 2021, 6.0% | 2016 | | $ | 0 | | | $ | 2 | | | $ | 0 | | | $ | (14) | | | $ | 0 | | | $ | 0 | | |
Guaranteed Notes due 2027, 3.5% | 2017 | | 4 | | | 7 | | | 8 | | | (73) | | | (94) | | | (102) | | |
Guaranteed Notes due 2022, 1.875% | 2018 | | 0 | | | 0 | | | 0 | | | 1 | | | 0 | | | 0 | | |
Guaranteed Notes due 2025, 1.25% | | Guaranteed Notes due 2025, 1.25% | | $ | 1 | | | $ | — | | | $ | 8 | | | $ | — | | | $ | 10 | | | $ | 2 | |
Guaranteed Notes due 2026, 0.875% | Guaranteed Notes due 2026, 0.875% | 2020 | | 0 | | | (1) | | | 1 | | | (1) | | | (1) | | | (2) | | Guaranteed Notes due 2026, 0.875% | | 3 | | | — | | | 7 | | | 1 | | | 8 | | | 1 | |
| Guaranteed Notes due 2027, 3.5% | Guaranteed Notes due 2027, 3.5% | 2021 | | (1) | | | — | | | (1) | | | — | | | (1) | | | — | | Guaranteed Notes due 2027, 3.5% | | 10 | | | 3 | | | 29 | | | 7 | | | (17) | | | (46) | |
Guaranteed Notes due 2030, 3.375% | Guaranteed Notes due 2030, 3.375% | 2021 | | (4) | | | — | | | (4) | | | — | | | (4) | | | — | | Guaranteed Notes due 2030, 3.375% | | 6 | | | (4) | | | 16 | | | (4) | | | 14 | | | (2) | |
Guaranteed Notes due 2030, 2.25% | | Guaranteed Notes due 2030, 2.25% | | 6 | | | — | | | 16 | | | — | | | 18 | | | 2 | |
Guaranteed Notes due 2031, 1.625% | | Guaranteed Notes due 2031, 1.625% | | 3 | | | — | | | 3 | | | — | | | 3 | | | — | |
Guaranteed Notes due 2050, 4.2% | | Guaranteed Notes due 2050, 4.2% | | 2 | | | — | | | 7 | | | — | | | 10 | | | 3 | |
Guaranteed Notes due 2051, 3.625% | | Guaranteed Notes due 2051, 3.625% | | 24 | | | — | | | 53 | | | — | | | 53 | | | — | |
Guaranteed Notes due 2060, 3.8% | | Guaranteed Notes due 2060, 3.8% | | 2 | | | — | | | 2 | | | — | | | 2 | | | — | |
Total | Total | | $ | (1) | | | $ | 8 | | | $ | 4 | | | $ | (87) | | | $ | (100) | | | $ | (104) | | Total | | $ | 57 | | | $ | (1) | | | $ | 141 | | | $ | 4 | | | $ | 101 | | | $ | (40) | |
Fair value adjustments are recognized in Interest expense in the Consolidated Statements of Income.
Short-term loans, notes and other debt consisted of the following:
| Millions of dollars | Millions of dollars | June 30, 2021 | | December 31, 2020 | Millions of dollars | June 30, 2022 | | December 31, 2021 |
| U.S. Receivables Facility | U.S. Receivables Facility | $ | 0 | | | $ | 0 | | U.S. Receivables Facility | $ | — | | | $ | — | |
| Commercial paper | Commercial paper | 500 | | | 500 | | Commercial paper | 309 | | | 204 | |
Precious metal financings | Precious metal financings | 167 | | | 140 | | Precious metal financings | 96 | | | 155 | |
Other | Other | 16 | | | 23 | | Other | — | | | 3 | |
Total Short-term debt | Total Short-term debt | $ | 683 | | | $ | 663 | | Total Short-term debt | $ | 405 | | | $ | 362 | |
Long-Term Debt
Senior Revolving Credit Facility—Our $2,500$3,250 million Senior Revolving Credit Facility, of which $2,440 million expires in June 2023 and the remainder expires in June 2022,November 2026, may be used for dollar and euro denominated borrowings. The facility has a $500$200 million sub-limit for dollar and euro denominated letters of credit, a $1,000 million uncommitted accordion feature and supports our commercial paper program. Borrowings under the facility bear interest at either a base rate, LIBOR rate or LIBOREURIBOR rate, plus an applicable margin. Additional fees are incurred for the average daily unused commitments. At June 30, 2021,2022, we had 0no borrowings or letters of credit outstanding and $2,010$2,941 million of unused availability under this facility.
Term Loan due 2022—In March 2019, LYB Americas Finance Company LLC (“LYB Americas Finance”), a wholly owned subsidiary of LyondellBasell Industries N.V., entered into a $4,000 million senior unsecured delayed draw term loan credit facility that matures in March 2022. Borrowings under the credit agreement were available through December 31, 2019, subsequent to which no further borrowings may be made under the agreement. Outstanding borrowings bear interest at either a base rate or LIBOR rate, as defined, plus in each case, an applicable margin determined by reference to LyondellBasell N.V.’s current credit ratings. In January 2021, we repaid $500 million outstanding under our Term Loan due 2022. The remaining outstanding balance of $950 million was repaid in the second quarter of 2021.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Guaranteed Notes due 2023—In July 2013, LYB Finance issued $750 million of 4% guaranteed notes due 2023 at a discounted price of 98.678%. In June 2021, we redeemed $325 million of the outstanding notes. In conjunction with the partial redemption, we recognized $25 million of debt extinguishment costs which are reflected in Interest expense in the Consolidated Statements of Income. The debt extinguishment costs include $23 million paid for make-whole premiums, fees and expenses related to the redemption of the notes and non-cash charges of $2 million for the write-off of unamortized debt discount and issuance costs.
Short-Term Debt
U.S. Receivables Facility—Our U.S. Receivables Facility, which expires in June 2024, has a purchase limit of $900 million in addition to a $300 million uncommitted accordion feature. In June 2021, we extended the term of the facility to June 2024 in accordance with the terms of the agreement. This facility provides liquidity through the sale or contribution of trade receivables by certain of our U.S. subsidiaries to a wholly owned, bankruptcy-remote subsidiary on an ongoing basis and without recourse. We pay variable interest rates on our secured borrowings. Additional fees are incurred for the average daily unused commitments. This facility also provides for the issuance of letters of credit up to $200 million. At June 30, 2021,2022, we had 0no borrowings or letters of credit outstanding and $900 million unused availability under this facility.
Commercial Paper Program—We have a commercial paper program under which we may issue up to $2,500 million of privately placed, unsecured, short-term promissory notes (“commercial paper”). Interest rates on the commercial paper outstanding at June 30, 20212022 are based on the terms of the notes and range from 0.14%1.77% to 0.25%1.85%. At June 30, 2021,2022, we had $500$309 million of outstanding commercial paper.
Weighted Average Interest Rate—At June 30, 20212022 and December 31, 2020,2021, our weighted average interest rates on outstanding Short-term debt were 0.7%1.8% and 0.9%, respectively.
Additional Information
Debt Discount and Issuance Costs—Amortization of debt discounts and debt issuance costs resulted in amortization expense of $13$8 million and $7$13 million for the six months ended June 30, 20212022 and 2020,2021, respectively, which is included in Interest expense in the Consolidated Statements of Income.
As of June 30, 2021,2022, we are in compliance with our debt covenants.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. Financial Instruments and Fair Value Measurements
We are exposed to market risks, such as changes in commodity pricing, interest rates and currency exchange rates. To manage the volatility related to these exposures, we selectively enter into derivative contracts pursuant to our risk management policies.
A summary of our financial instruments, risk management policies, derivative instruments, hedging activities and fair value measurement can be found in Notes 2 and 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. If applicable, updates have been included in the respective sections below.
Cash and Cash Equivalents—At June 30, 2021 and December 31, 2020, we had marketable securities classified as Cash and cash equivalents of $514 million and $682 million, respectively.
Foreign Currency Gain (Loss)—Other income, net, in the Consolidated Statements of Income includes foreign currency losses of $5 million and $2 million, and losses of less than $1 million and $7 million, for the three and six months ended June 30, 2021 and 2020, respectively.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Financial Instruments Measured at Fair Value on a Recurring Basis—The following table summarizes financial instruments outstanding for the periods presented that are measured at fair value on a recurring basis: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| June 30, 2021 | | December 31, 2020 | | |
Millions of dollars | Notional Amount | | Fair Value | | Notional Amount | | Fair Value | | Balance Sheet Classification |
Assets– | | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | |
Commodities | $ | 30 | | | $ | 22 | | | $ | 19 | | | $ | 3 | | | Prepaid expenses and other current assets |
Commodities | 20 | | | 7 | | | 41 | | | 4 | | | Other Assets |
Foreign currency | 358 | | | 26 | | | 0 | | | 26 | | | Prepaid expenses and other current assets |
Foreign currency | 923 | | | 21 | | | 0 | | | 0 | | | Other assets |
Interest rates | 0 | | | 4 | | | 0 | | | 0 | | | Prepaid expenses and other current assets |
Interest rates | 569 | | | 6 | | | 122 | | | 2 | | | Other assets |
Derivatives not designated as hedges: | | | | | | | | |
Commodities | 140 | | | 5 | | | 71 | | | 2 | | | Prepaid expenses and other current assets |
Foreign currency | 139 | | | 0 | | | 149 | | | 0 | | | Prepaid expenses and other current assets |
Non-derivatives: | | | | | | | | | |
Available-for-sale debt securities | 54 | | | 55 | | | 348 | | | 349 | | | Short-term investments |
Equity securities | 81 | | | 81 | | | 353 | | | 353 | | | Short-term investments |
Total | $ | 2,314 | | | $ | 227 | | | $ | 1,103 | | | $ | 739 | | | |
Liabilities– | | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | |
Commodities | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2 | | | Accrued liabilities |
| | | | | | | | | |
Foreign currency | 855 | | | 105 | | | 1,213 | | | 146 | | | Accrued liabilities |
Foreign currency | 2,682 | | | 222 | | | 2,682 | | | 302 | | | Other liabilities |
Interest rates | 0 | | | 1 | | | 0 | | | 0 | | | Accrued liabilities |
Interest rates | 1,000 | | | 243 | | | 1,000 | | | 343 | | | Other liabilities |
Derivatives not designated as hedges: | | | | | | | | |
Commodities | 118 | | | 11 | | | 113 | | | 14 | | | Accrued liabilities |
Foreign currency | 1,306 | | | 9 | | | 76 | | | 1 | | | Accrued liabilities |
| | | | | | | | | |
| | | | | | | | | |
Total | $ | 5,961 | | | $ | 591 | | | $ | 5,084 | | | $ | 808 | | | |
As of June 30, 2021, our limited partnership investments included in our equity securities discussed below are measured at fair value using the net asset value per share, or its equivalent, practical expedient and have not been classified in the fair value hierarchy. All other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 | | |
Millions of dollars | Notional Amount | | Fair Value | | Notional Amount | | Fair Value | | Balance Sheet Classification |
| | | | | | | | | |
Assets– | | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | |
Commodities | $ | 21 | | | $ | 28 | | | $ | 41 | | | $ | 24 | | | Prepaid expenses and other current assets |
| | | | | | | | | |
Foreign currency | 614 | | | 109 | | | 614 | | | 63 | | | Prepaid expenses and other current assets |
Foreign currency | 3,877 | | | 231 | | | 1,785 | | | 43 | | | Other assets |
Interest rates | — | | | 16 | | | — | | | 7 | | | Prepaid expenses and other current assets |
Interest rates | — | | | — | | | 300 | | | 1 | | | Other assets |
Derivatives not designated as hedges: | | | | | | | | |
Commodities | 79 | | | 13 | | | 221 | | | 30 | | | Prepaid expenses and other current assets |
Commodities | 24 | | | 5 | | | — | | | — | | | Other assets |
Foreign currency | 164 | | | 1 | | | 34 | | | 1 | | | Prepaid expenses and other current assets |
Non-derivatives: | | | | | | | | | |
| | | | | | | | | |
Equity securities | — | | | — | | | 9 | | | 8 | | | Short-term investments |
Total | $ | 4,779 | | | $ | 403 | | | $ | 3,004 | | | $ | 177 | | | |
| | | | | | | | | |
Liabilities– | | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | |
| | | | | | | | | |
Commodities | $ | 39 | | | $ | 7 | | | $ | — | | | $ | — | | | Accrued liabilities |
Foreign currency | — | | | 13 | | | — | | | 14 | | | Accrued liabilities |
Foreign currency | 400 | | | 1 | | | 1,800 | | | 99 | | | Other liabilities |
Interest rates | — | | | 9 | | | — | | | 3 | | | Accrued liabilities |
Interest rates | 2,558 | | | 157 | | | 1,863 | | | 280 | | | Other liabilities |
Derivatives not designated as hedges: | | | | | | | | |
Commodities | 202 | | | 18 | | | 24 | | | 1 | | | Accrued liabilities |
Commodities | 24 | | | — | | | — | | | — | | | Other Liabilities |
Foreign currency | 769 | | | 13 | | | 188 | | | 2 | | | Accrued liabilities |
| | | | | | | | | |
| | | | | | | | | |
Total | $ | 3,992 | | | $ | 218 | | | $ | 3,875 | | | $ | 399 | | | |
The financial instruments in the table above including equity securities as of December 31, 2020, are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments on the Consolidated Balance Sheets.
At June 30, 2021, our outstanding foreign currency contracts, not designated as hedges, mature from July 2021 to March 2022. Our commodity contracts, not designated as hedges, mature in July 2021.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Financial Instruments Not Measured at Fair Value on a Recurring Basis—The following table presents the carrying value and estimated fair value of our Short-term precious metal financings and Long-term debt:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Millions of dollars | Carrying Value | | Fair Value | | Carrying Value | | Fair Value |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Precious metal financings | $ | 96 | | | $ | 85 | | | $ | 155 | | | $ | 130 | |
Long-term debt | 11,036 | | | 9,806 | | | 11,218 | | | 12,756 | |
Total | $ | 11,132 | | | $ | 9,891 | | | $ | 11,373 | | | $ | 12,886 | |
The financial instruments thatin the table above are not measured at fair value on a recurring basis for the periods presented. Due to the short maturity, the fair value of all non-derivativeclassified as Level 2. Our other financial instruments included inclassified within Current assets and Current liabilities for which thehave a short maturity and their carrying value generally approximates fair value are excluded from the table below. Short-term and long-term debt are recorded at amortized cost in the Consolidated Balance Sheets. The carrying and fair values of short-term and of long-term debt exclude commercial paper and other miscellaneous debt. All financial instruments in the table below are classified as Level 2.value.
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 | | December 31, 2020 |
Millions of dollars | Carrying Value | | Fair Value | | Carrying Value | | Fair Value |
Non-derivatives: | | | | | | | |
| | | | | | | |
| | | | | | | |
Liabilities: | | | | | | | |
Short-term debt | $ | 167 | | | $ | 175 | | | $ | 140 | | | $ | 154 | |
Long-term debt | 13,465 | | | 15,123 | | | 15,266 | | | 17,290 | |
Total | $ | 13,632 | | | $ | 15,298 | | | $ | 15,406 | | | $ | 17,444 | |
Derivative Instruments:
Net Investment Hedges—Commodity Prices—The following table summarizespresents the notional amounts of our net investment hedges outstanding for the periods presented:commodity derivative instruments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| June 30, 2021 | | December 31, 2020 | | |
Millions of euro/dollars | Notional Value | | Notional Value | | Expiration Date |
| | | Equivalent US$ | | | | Equivalent US$ | | |
Foreign currency | € | 2,417 | | | $ | 2,813 | | | € | 1,667 | | | $ | 1,890 | | | 2021 to 2030 |
| | | | | | | | | |
In the second quarter of 2021, we entered into foreign currency contracts with an aggregate notional value of €750 million that were designated as net investment hedges.
In July 2021, we entered into a foreign currency contract with a notional value of €250 million that was designated as a net investment hedge. | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 | | |
Millions of dollars | Notional Amount | | Notional Amount | | Maturity Date |
Derivatives designated as hedges: | | |
Cash flow hedges | $ | 60 | | | $ | 41 | | | 2022 to 2023 |
Derivatives not designated as hedges: | | |
Commodity contracts | 329 | | | 245 | | | 2022 to 2023 |
Cash Flow Hedges—Interest Rates—The following table summarizespresents the notional amounts of our cash flow hedges outstanding for the periods presented:interest rate derivative instruments:
| | | | | | | | | | | | | | | | | |
| June 30, 2021 | | December 31, 2020 | | |
Millions of dollars | Notional Value | | Notional Value | | Expiration Date |
Foreign currency | $ | 2,005 | | | $ | 2,005 | | | 2021 to 2027 |
Interest rates | 1,000 | | | 1,000 | | | 2023 to 2024 |
Commodities | 50 | | | 60 | | | 2021 to 2022 |
| | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 | | | | | | |
Millions of dollars | Notional Amount | | Notional Amount | | Maturity Date | | | | |
Cash flow hedges | $ | 400 | | | $ | 1,000 | | | 2024 | | | | |
Fair value hedges | 2,158 | | | 1,163 | | | 2025 to 2031 | | | | |
As of June 30, 20212022 and December 31, 2020,2021, Other assets include$187included $21 million and $238 million of collateral held with our counterparties related to our forward-starting interest rate swaps, respectively. Related cash flows are included in financing activities inswaps.
Foreign Currency Rates—The following table presents the Consolidated Statementsnotional amounts of Cash Flows.our outstanding foreign currency derivative instruments:
| | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 | | | |
Millions of dollars | Notional Amount | | Notional Amount | | Maturity Date | |
Net investment hedges | $ | 3,741 | | | $ | 3,048 | | | 2022 to 2030 | |
Cash flow hedges | 1,150 | | | 1,150 | | | 2024 to 2027 | |
Not designated | 933 | | | 222 | | | 2022 to 2023 | |
| | | | | | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
As of June 30, 2021, on a pre-tax basis, $5 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to Interest expense over the next twelve months.
Fair Value Hedges—The following table summarizes our fair value hedges outstanding for the periods presented: | | | | | | | | | | | | | | | | | |
| | | | | |
| June 30, 2021 | | December 31, 2020 | | |
Millions of dollars | Notional Value | | Notional Value | | Expiration Date |
Interest rates | $ | 569 | | | $ | 122 | | | 2025 to 2030 |
In March 2021, we entered into a fixed-for-floating interest rate swap to mitigate the change in the fair value of $150 million of our $500 million, 3.375% guaranteed notes due 2030 associated with the risk of variability in the 3-month LIBOR rate component.
In April 2021, we entered into two fixed-for-floating interest rate swaps to mitigate the change in the fair value associated with the risk of variability in the 3-month LIBOR rate component of $150 million of our $500 million, 2.875% guaranteed notes due 2025 and $150 million of our $1,000 million, 3.5% guaranteed notes due 2027.
The fixed-rate and variable-rate components for these trades are settled semi-annually and quarterly, respectively.
Impact on Earnings and Other Comprehensive Income—The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive loss (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Effects of Financial Instruments |
| Three Months Ended June 30, |
| Gain (Loss) Recognized in AOCI | | Gain (Loss) Reclassified from AOCI to Income | | Gain (Loss) Recognized in Income | | Income Statement |
Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | Classification |
Derivatives designated as hedges: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Commodities | $ | 23 | | | $ | (2) | | | $ | (3) | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | Cost of sales |
Foreign currency | (9) | | | (86) | | | 24 | | | 45 | | | 13 | | | 14 | | | Interest expense |
Interest rates | (123) | | | 3 | | | 2 | | | 2 | | | 3 | | | (6) | | | Interest expense |
Derivatives not designated as hedges: | | | | | | | | | | | | | |
Commodities | 0 | | | 0 | | | 0 | | | 0 | | | 9 | | | 14 | | | Sales and other operating revenues |
Commodities | 0 | | | 0 | | | 0 | | | 0 | | | 12 | | | 77 | | | Cost of sales |
Foreign currency | 0 | | | 0 | | | 0 | | | 0 | | | (15) | | | (6) | | | Other income, net |
Non-derivatives designated as hedges: | | | | | | | | | | | | | |
Long-term debt | 0 | | | (20) | | | 0 | | | 0 | | | 0 | | | 0 | | | Other income, net |
Total | $ | (109) | | | $ | (105) | | | $ | 23 | | | $ | 47 | | | $ | 22 | | | $ | 93 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effects of Financial Instruments |
| Three Months Ended June 30, |
| Balance Sheet | | Income Statement | | |
| Gain (Loss) Recognized in AOCI | | Gain (Loss) Reclassified to Income from AOCI | | Additional Gain (Loss) Recognized in Income | | Income Statement |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | Classification |
Derivatives designated as hedges: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Commodities | $ | 4 | | | $ | 23 | | | $ | (21) | | | $ | (3) | | | $ | — | | | $ | — | | | Cost of sales |
Foreign currency | 277 | | | (9) | | | (77) | | | 24 | | | 19 | | | 13 | | | Interest expense |
Interest rates | 146 | | | (123) | | | 2 | | | 2 | | | (50) | | | 3 | | | Interest expense |
Derivatives not designated as hedges: | | | | | | | | | | | | |
Commodities | — | | | — | | | — | | | — | | | 46 | | | 9 | | | Sales and other operating revenues |
Commodities | — | | | — | | | — | | | — | | | 8 | | | 12 | | | Cost of sales |
Foreign currency | — | | | — | | | — | | | — | | | (20) | | | (15) | | | Other (expense) income, net |
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Total | $ | 427 | | | $ | (109) | | | $ | (96) | | | $ | 23 | | | $ | 3 | | | $ | 22 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effects of Financial Instruments |
| Six Months Ended June 30, |
| Balance Sheet | | Income Statement | | |
| Gain (Loss) Recognized in AOCI | | Gain (Loss) Reclassified to Income from AOCI | | Additional Gain (Loss) Recognized in Income | | Income Statement |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | Classification |
Derivatives designated as hedges: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Commodities | $ | 30 | | | $ | 29 | | | $ | (32) | | | $ | (4) | | | $ | — | | | $ | — | | | Cost of sales |
Foreign currency | 321 | | | 139 | | | (102) | | | (68) | | | 31 | | | 25 | | | Interest expense |
Interest rates | 258 | | | 100 | | | 3 | | | 3 | | | (127) | | | 5 | | | Interest expense |
Derivatives not designated as hedges: | | | | | | | | | | | | |
Commodities | — | | | — | | | — | | | — | | | 82 | | | 12 | | | Sales and other operating revenues |
Commodities | — | | | — | | | — | | | — | | | 11 | | | 23 | | | Cost of sales |
Foreign currency | — | | | — | | | — | | | — | | | (39) | | | (29) | | | Other (expense) income, net |
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Total | $ | 609 | | | $ | 268 | | | $ | (131) | | | $ | (69) | | | $ | (42) | | | $ | 36 | | | |
As of June 30, 2022, on a pre-tax basis, $6 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to Interest expense over the next twelve months.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Effects of Financial Instruments |
| Six Months Ended June 30, |
| Gain (Loss) Recognized in AOCI | | Gain (Loss) Reclassified from AOCI to Income | | Gain (Loss) Recognized in Income | | Income Statement |
Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | Classification |
Derivatives designated as hedges: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Commodities | $ | 29 | | | $ | (2) | | | $ | (4) | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | Cost of sales |
Foreign currency | 139 | | | 78 | | | (68) | | | (8) | | | 25 | | | 30 | | | Interest expense |
Interest rates | 100 | | | (532) | | | 3 | | | 2 | | | 5 | | | 90 | | | Interest expense |
Derivatives not designated as hedges: | | | | | | | | | | | | | |
Commodities | 0 | | | 0 | | | 0 | | | 0 | | | 12 | | | 5 | | | Sales and other operating revenues |
Commodities | 0 | | | 0 | | | 0 | | | 0 | | | 23 | | | 74 | | | Cost of sales |
Foreign currency | 0 | | | 0 | | | 0 | | | 0 | | | (29) | | | (10) | | | Other income, net |
Non-derivatives designated as hedges: | | | | | | | | | | | | | |
Long-term debt | 0 | | | 2 | | | 0 | | | 0 | | | 0 | | | 0 | | | Other income, net |
Total | $ | 268 | | | $ | (454) | | | $ | (69) | | | $ | (6) | | | $ | 36 | | | $ | 189 | | | |
Other Financial Instruments:
Cash and Cash Equivalents—At June 30, 2022 and December 31, 2021, we had marketable securities classified as Cash and cash equivalents of $569 million and $438 million, respectively.
8. Pension Benefits
Components of net periodic pension costs for our U.S. and non-U.S. plans are as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Plans |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
Service cost | $ | 13 | | | $ | 15 | | | $ | 26 | | | $ | 30 | |
Interest cost | 11 | | | 9 | | | 21 | | | 17 | |
Expected return on plan assets | (27) | | | (27) | | | (57) | | | (54) | |
Settlement loss | 94 | | | 4 | | | 94 | | | 4 | |
Actuarial loss amortization | 5 | | | 10 | | | 12 | | | 21 | |
Net periodic benefit costs | $ | 96 | | | $ | 11 | | | $ | 96 | | | $ | 18 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Non-U.S. Plans |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
Service cost | $ | 9 | | | $ | 11 | | | $ | 19 | | | $ | 22 | |
Interest cost | 7 | | | 5 | | | 14 | | | 11 | |
Expected return on plan assets | (5) | | | (4) | | | (10) | | | (8) | |
| | | | | | | |
Prior service amortization | 1 | | | 1 | | | 1 | | | 1 | |
Actuarial loss amortization | 2 | | | 4 | | | 4 | | | 8 | |
Net periodic benefit costs | $ | 14 | | | $ | 17 | | | $ | 28 | | | $ | 34 | |
The derivative amounts excludedcomponents of net periodic benefit cost other than the service cost component are included in Other (expense) income, net in the Consolidated Statements of Income.
In May 2022, a LyondellBasell sponsored pension plan purchased a group annuity contract from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in other comprehensive income for the three and six months ended June 30, 2021 were gains of less than $1an insurance company to transfer $361 million and $4 million, respectively and for the three and six months ended June 30, 2020 were losses of $2 million each.
The derivative amounts excluded from the assessment of effectiveness for foreign currency contracts designated as net investment hedges recognized in Interest expense for the three and six months ended June 30, 2021 were gains of $2 million and $5 million, respectively, and for the three and six months ended June 30, 2020 were gains of $3 million and $7 million, respectively.
The pre-tax effect of the periodic receipt of fixed interest and payment of variable interest associated with our fixed-for-floating interest rate swaps resulted in $1 million decrease in Interest expense during each of the three and six months ended June 30, 2021, respectively, and $1 million and $3 million decrease in interest expense during the three and six months ended June 30, 2020, respectively.
Investments in Available-for-Sale Debt Securities—The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of our outstanding available-for-sale debt securities:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Millions of dollars | | Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| | | | | | | | |
Debt securities at June 30, 2021 | | $ | 54 | | | $ | 1 | | | $ | 0 | | | $ | 55 | |
Debt securities at December 31, 2020 | | 348 | | | 1 | | | 0 | | | 349 | |
NaN allowance for credit lossespension benefit obligations related to our available-for-sale debt securities were recorded forcertain U.S. retirees and beneficiaries. The purchase of the threegroup annuity contract was funded with pension plan assets. The insurance company is now required to pay and six months ended June 30, 2021administer the retirement benefits owed to approximately 9,000 U.S. retirees and forbeneficiaries with no change to their monthly retirement benefit payment amounts. In connection with this transaction and regular lump sum distributions, in the year ended December 31, 2020.second quarter of 2022, we recognized a non-cash pension settlement loss of $94 million, reflected in Other (expense) income, net, primarily related to the accelerated recognition of actuarial losses included in Accumulated other comprehensive loss.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
As of June 30, 2021, bonds classified as available-for-sale debt securities had remaining maturities of less than 1 month.
We received proceeds of $217 million and $291 million from maturities of our available-for-sale debt securities during the three and six months ended June 30, 2021. NaN proceeds were received from maturities of our available-for-sale debt securities during the three and six months ended June 30, 2020. In addition, 0 proceeds were received and 0 gain or loss was realized in connection with the sales of our available-for-sale debt securities during the three and six months ended June 30, 2021 and 2020, respectively.
We had 0 available-for-sale debt securities which were in a continuous unrealized loss position for less than or greater than twelve months as of June 30, 2021 and December 31, 2020.
Investments in Equity Securities—Our investment in equity securities consists of an investment in a limited partnership with a notional amount of $81 million and $353 million as of June 30, 2021 and December 31, 2020, respectively. The carrying amount approximate fair value. The investment is carried at its net asset value as a practical expedient at June 30, 2021 and fair value at December 31, 2020. The investment is under voluntary liquidation by the fund administrator and we expect the investment to be fully liquidated by early 2022, during which time redemption or sale of the investment is restricted.
We received proceeds of $38 million and $264 million related to our investments in equity securities during the three and six months ended June 30, 2021, respectively, and $1 million during the six months ended June 30, 2020. NaN proceeds related to the sale of investments in equity securities were received during the three months ended June 30, 2020. Proceeds of $26 million were received in July 2021.
We recognized unrealized gain of less than $1 million on our equity securities that were outstanding during the three and six months ended June 30, 2021 and 0 unrealized gains or losses was recognized during the three and six months ended in June 30, 2020.8.9. Income Taxes
For interim tax reporting, we estimate an annual effective tax rate which is applied to the year-to-date ordinary income (loss).income. Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. Our effective income tax rate fluctuates based on, among other factors, changes in pretaxpre-tax income in countries with varying statutory tax rates, changes in valuation allowances, changes in foreign exchange gains or losses, the amount of exempt income, changes in unrecognized tax benefits associated with uncertain tax positions and changes in tax laws.
Our exempt income primarily includes interest income, export incentives, and equity earnings of joint ventures. Interest income earned by certain of our European subsidiaries through intercompany financings is taxed at rates substantially lower than the U.S. statutory rate. Export incentives relate to tax benefits derived from elections and structures available for U.S. exports. Equity earnings attributable to the earnings of our joint ventures, when paid through dividends to certain European subsidiaries, are exempt from all or portions of normal statutory income tax rates. We currently anticipate the favorable treatment for interest income, dividends, and export incentives to continue in the near term; however, this treatment is based on current law and tax rulings, which could change.
change if the tax reform proposals in the U.S. and the Pillar Two proposals by the Organization for Economic Cooperation and Development (“OECD”) are enacted.
Our effective income tax rate for the three months ended June 30, 2021second quarter of 2022 was 19.7%18.7% compared with -11.3%19.7% for the three months ended June 30, 2020. In March 2020,second quarter of 2021. The lower effective tax rate for the U.S. enactedsecond quarter of 2022 is primarily attributable to changes in pre-tax income in countries with varying statutory tax rates and changes in foreign exchange gains or losses which resulted in a 1.8% and 1.0% decrease in our effective tax rate, respectively. These decreases were partially offset by a 1.8% increase in the effective tax rate driven by benefits recognized in the second quarter of 2021 resulting from the Coronavirus Aid, Relief, and Economic Security Act, also known as the “CARES Act.” The higherAct”; such benefits did not impact our effective tax rate forin the three months ended June 30, 2021 was primarily attributable to benefits resulting from the CARES Act (27.1%) and exempt income (10.0%) relative to pretax earnings.second quarter of 2022.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Our effective income tax rate for the first six months ended June 30, 2021of 2022 was 15.5%19.0% compared with 8.6%15.5% for the first six months ended June 30, 2020.The higher effective tax rate forof 2021. In the first six months ended June 30,of 2021, was attributable to benefits resultingwe benefited from the CARES Act (4.4%) and exempt income (8.9%) relative to pretax earnings. These drivers were partially offset by return to accrual adjustments primarily from a tax benefit associated with a step-up of certain Italian assets to fair market value (-3.2%).
Asand benefits resulting from the CARES Act of June 30, 20213.2% and December 31, 2020, we had $499 million and $67 million, respectively,2.0%, respectively; such benefits did not impact our effective tax rate in the first six months of income taxes payable which was included in Accrued liabilities2022. These increases were partially offset by a 1.1% decrease in our Consolidated Balance Sheets.
effective income tax rate due to changes in pre-tax income in countries with varying statutory tax rates.
9.
10. Commitments and Contingencies
Commitments—We have various purchase commitments for materials, supplies and services incidental to the ordinary conduct of business, generally for quantities required for our businesses and at prevailing market prices. These commitments are designed to assure sources of supply and are not expected to be in excess of normal requirements. As of June 30, 2021, 2022, we had capital expenditure commitments, which we incurred in our normal course of business,, including commitments of approximately $259$147 million related to building our new PO/TBA plant in Houston, Texas.
Financial Assurance Instruments—We have obtained letters of credit, performance and surety bonds and have issued financial and performance guarantees to support trade payables, potential liabilities and other obligations. Considering the frequency of claims made against the financial instruments we use to support our obligations, and the magnitude of those financial instruments in light of our current financial position, management does not expect that any claims against or draws on these instruments would have a material adverse effect on our Consolidated Financial Statements. We have not experienced any unmanageable difficultydifficulties in obtaining the required financial assurance instruments for our current operations.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Environmental Remediation—Our accrued liability for future environmental remediation costs at current and former plant sites and other remediation sites totaled $129 million and $133$138 million as of June 30, 20212022 and December 31, 2020,2021, respectively. At June 30, 2021,2022, the accrued liabilities for individual sites range from less than $1 million to $16$26 million. The remediation expenditures are expected to occur over a number of years and are not concentrated in any single year. In our opinion, it is reasonably possible that losses in excess of the liabilities recorded may have been incurred. However, we cannot estimate any amount or range of such possible additional losses. New information about sites, new technology or future developments, such as involvement in investigations by regulatory agencies, could require us to reassess our potential exposure related to environmental matters. Indemnification—We are parties to various indemnification arrangements, including arrangements entered into in connection with acquisitions, divestitures and the formation and dissolution of joint ventures. Pursuant to these arrangements, we provide indemnification to and/or receive indemnification from other parties in connection with liabilities that may arise in connection with the transactions and in connection with activities prior to completion of the transactions. These indemnification arrangements typically include provisions pertaining to third-party claims relating to environmental and tax matters and various types of litigation. As of June 30, 2021,2022, we had not accrued any significant amounts for our indemnification obligations, and we are not aware of other circumstances that would likely lead to significant future indemnification obligations. We cannot determine with certainty the potential amount of future payments under the indemnification arrangements until events arise that would trigger a liability under the arrangements.
As part of our technology licensing contracts, we give indemnifications to our licensees for liabilities arising from possible patent infringement claims with respect to certain proprietary licensed technologies. Such indemnifications have a stated maximum amount and generally cover a period of 5 to 10 years.
Legal Proceedings—We are subject to various lawsuits and claims, including but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor legal proceedings in which we are a party. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases that have been scheduled for trial, mediation or other resolution. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.
Based on a consideration of all relevant facts and circumstances, we do not believe the ultimate outcome of any currently pending lawsuit against us will have a material adverse effect upon our operations, financial condition or Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. Shareholders’ Equity and Redeemable Non-controlling Interests
Shareholders’ Equity
Dividend Distributions—In May 2022, our board of directors declared a special dividend of $5.20 per share. The following table summarizedsummarizes the dividends paid in the periodsperiod presented:
| | | | | | | | | | | | | | | | | |
Millions of dollars, except per share amounts | Dividend Per Ordinary Share | | Aggregate Dividends Paid | | Date of Record |
March 2021 | $ | 1.05 | | | $ | 352 | | | March 8, 2021 |
June 2021 | 1.13 | | | 378 | | | June 7, 2021 |
| | | | | |
| $ | 2.18 | | | $ | 730 | | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
Millions of dollars, except per share amounts | Dividend Per Ordinary Share | | Aggregate Dividends Paid | | Date of Record |
March 2022 - Quarterly dividend | $ | 1.13 | | | $ | 371 | | | March 7, 2022 |
June 2022 - Quarterly dividend | 1.19 | | | 389 | | | June 6, 2022 |
| | | | | |
June 2022 - Special dividend | 5.20 | | | 1,704 | | | June 6, 2022 |
| $ | 7.52 | | | $ | 2,464 | | | |
Share Repurchase Authorization—In May 2021,2022, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 28, 27, 2023 (“2022 (“May 2021 Share Repurchase Authorization”), which superseded any prior repurchase authorizations. The timing and amount of these repurchases, which are determined based on our evaluation of market conditions and other factors, may be executed from time to time through open market or privately negotiated transactions. The repurchased shares, which are recorded at cost, are classified as Treasury stock and may be retired or used for general corporate purposes, including for various employee benefit and compensation plans. As of
The following table summarizes our share repurchase activity for the period presented:
| | | | | | | | | | | | | | | | | | | | |
Millions of dollars, except shares and per share amounts | | Shares Repurchased | | Average Purchase Price | | Total Purchase Price, Including Commissions and Fees |
For six months ended June 30, 2022: | | | | | | |
2021 Share Repurchase Authorization | | 2,111,538 | | | $ | 97.72 | | | $ | 206 | |
2022 Share Repurchase Authorization | | 560,396 | | | 89.24 | | | 50 | |
| | 2,671,934 | | | $ | 95.94 | | | $ | 256 | |
| | | | | | |
| | | | | | |
| | | | | | |
Total cash paid for share repurchases for the six months ended June 30, 2021, there2022 was $262 million. Cash payments made during the reporting period may differ from the total purchase price, including commissions and fees, due to the timing of payments. There were 0no share repurchases underduring the May 2021 Share Repurchase Authorization.six months ended June 30, 2021.
Ordinary Shares—The changes in the outstanding amounts of ordinary shares are as follows: | | | | | | | | | | | |
| | | |
| Six Months Ended June 30, |
| 2021 | | 2020 |
Ordinary shares outstanding: | | | |
Beginning balance | 334,015,220 | | | 333,476,883 | |
Share-based compensation | 390,264 | | | 225,367 | |
| | | |
Employee stock purchase plan | 98,034 | | | 178,239 | |
Purchase of ordinary shares | 0 | | | (50,685) | |
Ending balance | 334,503,518 | | | 333,829,804 | |
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
Ordinary shares outstanding: | | | |
Beginning balance | 329,536,389 | | | 334,015,220 | |
Share-based compensation | 255,185 | | | 390,264 | |
| | | |
Employee stock purchase plan | 125,010 | | | 98,034 | |
Purchase of ordinary shares | (2,671,934) | | | — | |
Ending balance | 327,244,650 | | | 334,503,518 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Treasury Shares—The changes in the amounts of treasury shares held by the Company are as follows: | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2021 | | 2020 |
Ordinary shares held as treasury shares: | | | |
Beginning balance | 6,030,408 | | | 6,568,745 | |
Share-based compensation | (390,264) | | | (225,367) | |
| | | |
Employee stock purchase plan | (50,006) | | | (178,239) | |
Purchase of ordinary shares | 0 | | | 50,685 | |
| | | |
Ending balance | 5,590,138 | | | 6,215,824 | |
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
Ordinary shares held as treasury shares: | | | |
Beginning balance | 10,675,605 | | | 6,030,408 | |
Share-based compensation | (255,185) | | | (390,264) | |
| | | |
Employee stock purchase plan | — | | | (50,006) | |
Purchase of ordinary shares | 2,671,934 | | | — | |
| | | |
Ending balance | 13,092,354 | | | 5,590,138 | |
Accumulated Other Comprehensive Loss—The components of, and after-tax changes in, Accumulated other comprehensive loss as of and for the six months ended June 30, 20212022 and 20202021 are presented in the following tables: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Millions of dollars | Financial Derivatives | | Unrealized Gains on Available -for-Sale Debt Securities | | | | Defined Benefit Pension and Other Postretirement Benefit Plans | | Foreign Currency Translation Adjustments | | Total |
Balance – January 1, 2021 | $ | (426) | | | $ | 1 | | | | | $ | (752) | | | $ | (766) | | | $ | (1,943) | |
Other comprehensive income (loss) before reclassifications | 193 | | | (1) | | | | | 0 | | | (12) | | | 180 | |
Tax expense before reclassifications | (42) | | | 0 | | | | | 0 | | | (18) | | | (60) | |
Amounts reclassified from accumulated other comprehensive loss | (69) | | | 0 | | | | | 32 | | | 0 | | | (37) | |
Tax (expense) benefit | 15 | | | 0 | | | | | (4) | | | 0 | | | 11 | |
Net other comprehensive income (loss) | 97 | | | (1) | | | | | 28 | | | (30) | | | 94 | |
Balance – June 30, 2021 | $ | (329) | | | $ | 0 | | | | | $ | (724) | | | $ | (796) | | | $ | (1,849) | |
| | Millions of dollars | Millions of dollars | Financial Derivatives | | Unrealized Gains on Available -for-Sale Debt Securities | | | Defined Benefit Pension and Other Postretirement Benefit Plans | | Foreign Currency Translation Adjustments | | Total | Millions of dollars | Financial Derivatives | | | | Defined Benefit Pension and Other Postretirement Benefit Plans | | Foreign Currency Translation Adjustments | | Total |
Balance – January 1, 2020 | $ | (200) | | | $ | 0 | | | | $ | (711) | | | $ | (873) | | | $ | (1,784) | | |
Balance – December 31, 2021 | | Balance – December 31, 2021 | $ | (354) | | | | | $ | (528) | | | $ | (921) | | | $ | (1,803) | |
Other comprehensive income (loss) before reclassifications | Other comprehensive income (loss) before reclassifications | (456) | | | 1 | | | | 0 | | | (133) | | | (588) | | Other comprehensive income (loss) before reclassifications | 372 | | | | | — | | | (123) | | | 249 | |
Tax benefit before reclassifications | 95 | | | 0 | | | | 0 | | | 0 | | | 95 | | |
Tax expense before reclassifications | | Tax expense before reclassifications | (84) | | | | | — | | | (63) | | | (147) | |
Amounts reclassified from accumulated other comprehensive loss | Amounts reclassified from accumulated other comprehensive loss | (6) | | | 0 | | | | 28 | | | 0 | | | 22 | | Amounts reclassified from accumulated other comprehensive loss | (131) | | | | | 109 | | | — | | | (22) | |
Tax (expense) benefit | Tax (expense) benefit | 3 | | | 0 | | | | (7) | | | 0 | | | (4) | | Tax (expense) benefit | 33 | | | | | (26) | | | — | | | 7 | |
Net other comprehensive income (loss) | Net other comprehensive income (loss) | (364) | | | 1 | | | | 21 | | | (133) | | | (475) | | Net other comprehensive income (loss) | 190 | | | | | 83 | | | (186) | | | 87 | |
Balance – June 30, 2020 | $ | (564) | | | $ | 1 | | | | $ | (690) | | | $ | (1,006) | | | $ | (2,259) | | |
Balance – June 30, 2022 | | Balance – June 30, 2022 | $ | (164) | | | | | $ | (445) | | | $ | (1,107) | | | $ | (1,716) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Millions of dollars | Financial Derivatives | | Unrealized Gains (Losses) on Available -for-Sale Debt Securities | | | | Defined Benefit Pension and Other Postretirement Benefit Plans | | Foreign Currency Translation Adjustments | | Total |
Balance – December 31, 2020 | $ | (426) | | | $ | 1 | | | | | $ | (752) | | | $ | (766) | | | $ | (1,943) | |
Other comprehensive income (loss) before reclassifications | 193 | | | (1) | | | | | — | | | (12) | | | 180 | |
Tax expense before reclassifications | (42) | | | — | | | | | — | | | (18) | | | (60) | |
Amounts reclassified from accumulated other comprehensive loss | (69) | | | — | | | | | 32 | | | — | | | (37) | |
Tax (expense) benefit | 15 | | | — | | | | | (4) | | | — | | | 11 | |
Net other comprehensive income (loss) | 97 | | | (1) | | | | | 28 | | | (30) | | | 94 | |
Balance – June 30, 2021 | $ | (329) | | | $ | — | | | | | $ | (724) | | | $ | (796) | | | $ | (1,849) | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The amounts reclassified out of each component of Accumulated other comprehensive loss are as follows:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Affected Line Item on the Consolidated Statements of Income | | Three Months Ended June 30, | | Six Months Ended June 30, | | Affected Line Item on the Consolidated Statements of Income |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | | Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 | |
Reclassification adjustments for: | Reclassification adjustments for: | | | | | | | | | | Reclassification adjustments for: | | | | | | | | | |
Financial derivatives: | Financial derivatives: | | Financial derivatives: | |
Foreign currency | $ | 24 | | | $ | 45 | | | $ | (68) | | | $ | (8) | | | Interest expense | |
| Commodities | Commodities | (3) | | | 0 | | | (4) | | | 0 | | | Cost of sales | Commodities | $ | (21) | | | $ | (3) | | | $ | (32) | | | $ | (4) | | | Cost of sales |
Foreign currency | | Foreign currency | (77) | | | 24 | | | (102) | | | (68) | | | Interest expense |
Interest rates | Interest rates | 2 | | | 2 | | | 3 | | | 2 | | | Interest expense | Interest rates | 2 | | | 2 | | | 3 | | | 3 | | | Interest expense |
Income tax (expense) benefit | Income tax (expense) benefit | (5) | | | (12) | | | 15 | | | 3 | | | Provision for income taxes | Income tax (expense) benefit | 25 | | | (5) | | | 33 | | | 15 | | | Provision for income taxes |
Financial derivatives, net of tax | Financial derivatives, net of tax | 18 | | | 35 | | | (54) | | | (3) | | | Financial derivatives, net of tax | (71) | | | 18 | | | (98) | | | (54) | | |
| Amortization of defined pension items: | Amortization of defined pension items: | | Amortization of defined pension items: | |
Settlement loss | | Settlement loss | 94 | | | 4 | | | 94 | | | 4 | | | Other (expense) income, net |
Actuarial loss | | Actuarial loss | 6 | | | 12 | | | 13 | | | 26 | | | Other (expense) income, net |
Prior service cost | Prior service cost | 1 | | | 1 | | | 2 | | | 2 | | | Other income, net | Prior service cost | 1 | | | 1 | | | 2 | | | 2 | | | Other (expense) income, net |
Actuarial loss | 12 | | | 13 | | | 26 | | | 26 | | | Other income, net | |
Settlement loss | 4 | | | 0 | | | 4 | | | 0 | | | Other income, net | |
Income tax expense | Income tax expense | 0 | | | (3) | | | (4) | | | (7) | | | Provision for income taxes | Income tax expense | (23) | | | — | | | (26) | | | (4) | | | Provision for income taxes |
Defined pension items, net of tax | Defined pension items, net of tax | 17 | | | 11 | | | 28 | | | 21 | | | Defined pension items, net of tax | 78 | | | 17 | | | 83 | | | 28 | | |
| Total reclassifications, before tax | Total reclassifications, before tax | 40 | | | 61 | | | (37) | | | 22 | | | Total reclassifications, before tax | 5 | | | 40 | | | (22) | | | (37) | | |
Income tax (expense) benefit | Income tax (expense) benefit | (5) | | | (15) | | | 11 | | | (4) | | | Provision for income taxes | Income tax (expense) benefit | 2 | | | (5) | | | 7 | | | 11 | | | Provision for income taxes |
Total reclassifications, after tax | Total reclassifications, after tax | $ | 35 | | | $ | 46 | | | $ | (26) | | | $ | 18 | | | Amount included in net income | Total reclassifications, after tax | $ | 7 | | | $ | 35 | | | $ | (15) | | | $ | (26) | | | Amount included in net income |
Redeemable Non-controlling Interests
Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by oura consolidated subsidiary. As of June 30, 20212022 and December 31, 2020,2021, we had 115,374 shares of redeemable non-controlling interest stock outstanding. In February and May 2021,2022, we paid cash dividends of $15.00 per share to our redeemable non-controlling interest shareholders of record as of January 15, 20212022 and April 15, 2021. These dividends2022. Dividends totaled $3 million for each of the six months ended June 30, 20212022 and 2020.2021.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11.12. Per Share Data
Basic earnings per share areis based upon the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share includes the effect of certain stock option awards and other equity-based compensation awards. We haveOur unvested restricted stock units thatcontain non-forfeitable rights to dividend equivalents and are considered participating securities forsecurities. We calculate basic and diluted earnings per share.share under the two-class method.
Earnings per share data and dividends declared per share of common stock areis as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Three Months Ended June 30, |
| 2021 | | 2020 |
Millions of dollars | Continuing Operations | | Discontinued Operations | | Continuing Operations | | Discontinued Operations |
Net income (loss) | $ | 2,057 | | | $ | 2 | | | $ | 315 | | | $ | (1) | |
| | | | | | | |
| | | | | | | |
Dividends on redeemable non-controlling interests | (1) | | | 0 | | | (1) | | | 0 | |
Net (income) loss attributable to participating securities | (6) | | | 0 | | | (1) | | | 0 | |
Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 2,050 | | | $ | 2 | | | $ | 313 | | | $ | (1) | |
| | | | | | | |
Millions of shares, except per share amounts | | | | | | | |
Basic weighted average common stock outstanding | 334 | | | 334 | | | 334 | | | 334 | |
| | | | | | | |
Effect of dilutive securities | 1 | | | 1 | | | 0 | | | 0 | |
Potential dilutive shares | 335 | | | 335 | | | 334 | | | 334 | |
| | | | | | | |
Earnings (loss) per share: | | | | | | | |
Basic | $ | 6.13 | | | $ | 0.01 | | | $ | 0.94 | | | $ | 0 | |
Diluted | $ | 6.12 | | | $ | 0.01 | | | $ | 0.94 | | | $ | 0 | |
| | | | | | | |
| | | | | | | |
| | | | Six Months Ended June 30, | | Three Months Ended June 30, |
| | 2021 | | 2020 | | 2022 | | 2021 |
Millions of dollars | Millions of dollars | Continuing Operations | | Discontinued Operations | | Continuing Operations | | Discontinued Operations | Millions of dollars | Continuing Operations | | Discontinued Operations | | Continuing Operations | | Discontinued Operations |
Net income (loss) | Net income (loss) | $ | 3,129 | | | $ | 0 | | | $ | 458 | | | $ | 0 | | Net income (loss) | $ | 1,645 | | | $ | (1) | | | $ | 2,057 | | | $ | 2 | |
| Dividends on redeemable non-controlling interests | Dividends on redeemable non-controlling interests | (3) | | | 0 | | | (3) | | | 0 | | Dividends on redeemable non-controlling interests | (1) | | | — | | | (1) | | | — | |
Net (income) loss attributable to participating securities | (8) | | | 0 | | | (1) | | | 0 | | |
Net income attributable to participating securities | | Net income attributable to participating securities | (7) | | | — | | | (6) | | | — | |
Net income (loss) attributable to ordinary shareholders – basic and diluted | Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 3,118 | | | $ | 0 | | | $ | 454 | | | $ | 0 | | Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 1,637 | | | $ | (1) | | | $ | 2,050 | | | $ | 2 | |
| Millions of shares, except per share amounts | Millions of shares, except per share amounts | | Millions of shares, except per share amounts | |
Basic weighted average common stock outstanding | Basic weighted average common stock outstanding | 334 | | | 334 | | | 334 | | | 334 | | Basic weighted average common stock outstanding | 328 | | | 328 | | | 334 | | | 334 | |
Effect of dilutive securities | Effect of dilutive securities | 1 | | | 1 | | | 0 | | | 0 | | Effect of dilutive securities | 1 | | | 1 | | | 1 | | | 1 | |
| Potential dilutive shares | Potential dilutive shares | 335 | | | 335 | | | 334 | | | 334 | | Potential dilutive shares | 329 | | | 329 | | | 335 | | | 335 | |
| Earnings (loss) per share: | | |
Earnings per share: | | Earnings per share: | |
Basic | Basic | $ | 9.33 | | | $ | 0 | | | $ | 1.36 | | | $ | 0 | | Basic | $ | 5.00 | | | $ | — | | | $ | 6.13 | | | $ | 0.01 | |
Diluted | Diluted | $ | 9.32 | | | $ | 0 | | | $ | 1.36 | | | $ | 0 | | Diluted | $ | 4.98 | | | $ | — | | | $ | 6.12 | | | $ | 0.01 | |
|
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
Millions of dollars | Continuing Operations | | Discontinued Operations | | Continuing Operations | | Discontinued Operations |
Net income (loss) | $ | 2,966 | | | $ | (2) | | | $ | 3,129 | | | $ | — | |
| | | | | | | |
| | | | | | | |
Dividends on redeemable non-controlling interests | (3) | | | — | | | (3) | | | — | |
Net income attributable to participating securities | (9) | | | — | | | (8) | | | — | |
Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 2,954 | | | $ | (2) | | | $ | 3,118 | | | $ | — | |
| | | | | | | |
Millions of shares, except per share amounts | | | | | | | |
Basic weighted average common stock outstanding | 328 | | | 328 | | | 334 | | | 334 | |
Effect of dilutive securities | 1 | | | 1 | | | 1 | | | 1 | |
Potential dilutive shares | 329 | | | 329 | | | 335 | | | 335 | |
| | | | | | | |
Earnings per share: | | | | | | | |
Basic | $ | 9.01 | | | $ | (0.01) | | | $ | 9.33 | | | $ | — | |
Diluted | $ | 8.99 | | | $ | (0.01) | | | $ | 9.32 | | | $ | — | |
| | | | | | | |
| | | | | | | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
12.13. Segment and Related Information
Our operations are managed by senior executives who report to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the operating results of each of the operating segments for performance evaluation and resource allocation. The activities of each of our segments from which they earn revenues and incur expenses are described below:
•Olefins and Polyolefins—Americas (“O&P—Americas”). Our O&P—Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.
•Olefins and Polyolefins—Europe, Asia, International (“O&P—EAI”). Our O&P—EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
•Intermediates and Derivatives (“I&D”). Our I&D segment produces and markets propylene oxide and its derivatives, oxyfuels and related products, and intermediate chemicals such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.
•Advanced Polymer Solutions (“APS”). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers, which includes Catalloy and polybutene-1.
•Refining. Our Refining segment refines heavy, high-sulfur crude oil and other crude oils of varied types and sources available on the U.S. Gulf Coast into refined products, including gasoline and distillates.
•Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.
Our chief operating decision maker uses EBITDA as the primary measure for reviewing profitability of our segments, and therefore, we have presented EBITDA for all segments. We define EBITDA as earnings from continuing operations before interest, income taxes, and depreciation and amortization.
“Other” includes intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefit costs other than service costs. Sales between segments are made primarily at prices approximating prevailing market prices.
Summarized financial information concerning reportable segments is shown in the following tables for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2021 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 2,564 | | | $ | 3,240 | | | $ | 2,531 | | | $ | 1,333 | | | $ | 1,741 | | | $ | 152 | | | $ | 0 | | | $ | 11,561 | |
Intersegment | 1,159 | | | 215 | | | 54 | | | 3 | | | 204 | | | 31 | | | (1,666) | | | 0 | |
| 3,723 | | | 3,455 | | | 2,585 | | | 1,336 | | | 1,945 | | | 183 | | | (1,666) | | | 11,561 | |
Income from equity investments | 35 | | | 102 | | | 11 | | | 0 | | | 0 | | | 0 | | | 0 | | | 148 | |
EBITDA | 1,576 | | | 708 | | | 596 | | | 129 | | | (81) | | | 92 | | | (2) | | | 3,018 | |
Capital expenditures | 82 | | | 47 | | | 245 | | | 15 | | | 20 | | | 20 | | | 2 | | | 431 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2020 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 1,073 | | | $ | 1,642 | | | $ | 1,140 | | | $ | 700 | | | $ | 854 | | | $ | 137 | | | $ | 0 | | | $ | 5,546 | |
Intersegment | 360 | | | 60 | | | 17 | | | 5 | | | 65 | | | 40 | | | (547) | | | 0 | |
| 1,433 | | | 1,702 | | | 1,157 | | | 705 | | | 919 | | | 177 | | | (547) | | | 5,546 | |
Income from equity investments | 7 | | | 51 | | | 3 | | | 0 | | | 0 | | | 0 | | | 0 | | | 61 | |
LCM inventory valuation (benefit) charge | (38) | | | 34 | | | 20 | | | 67 | | | (179) | | | 0 | | | 0 | | | (96) | |
EBITDA | 248 | | | 185 | | | 101 | | | (44) | | | 165 | | | 112 | | | (7) | | | 760 | |
Capital expenditures | 190 | | | 34 | | | 305 | | | 10 | | | 21 | | | 26 | | | 2 | | | 588 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2021 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 4,699 | | | $ | 6,080 | | | $ | 4,235 | | | $ | 2,602 | | | $ | 2,734 | | | $ | 293 | | | $ | 0 | | | $ | 20,643 | |
Intersegment | 1,883 | | | 422 | | | 117 | | | 4 | | | 337 | | | 55 | | | (2,818) | | | 0 | |
| 6,582 | | | 6,502 | | | 4,352 | | | 2,606 | | | 3,071 | | | 348 | | | (2,818) | | | 20,643 | |
Income from equity investments | 65 | | | 197 | | | 23 | | | 0 | | | 0 | | | 0 | | | 0 | | | 285 | |
EBITDA | 2,443 | | | 1,120 | | | 778 | | | 264 | | | (191) | | | 186 | | | 3 | | | 4,603 | |
Capital expenditures | 147 | | | 87 | | | 390 | | | 35 | | | 45 | | | 42 | | | 25 | | | 771 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, 2020 | | Three Months Ended June 30, 2022 |
Millions of dollars | Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total | Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | Sales and other operating revenues: | | | | | | | | | | | | | | | | Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | Customers | $ | 2,246 | | | $ | 3,706 | | | $ | 2,872 | | | $ | 1,793 | | | $ | 2,190 | | | $ | 233 | | | $ | 0 | | | $ | 13,040 | | Customers | $ | 2,559 | | | $ | 3,476 | | | $ | 3,714 | | | $ | 1,423 | | | $ | 3,503 | | | $ | 163 | | | $ | — | | | $ | 14,838 | |
Intersegment | Intersegment | 979 | | | 220 | | | 55 | | | 8 | | | 177 | | | 66 | | | (1,505) | | | 0 | | Intersegment | 1,510 | | | 238 | | | 52 | | | 2 | | | 285 | | | 31 | | | (2,118) | | | — | |
| | 3,225 | | | 3,926 | | | 2,927 | | | 1,801 | | | 2,367 | | | 299 | | | (1,505) | | | 13,040 | | | 4,069 | | | 3,714 | | | 3,766 | | | 1,425 | | | 3,788 | | | 194 | | | (2,118) | | | 14,838 | |
Income (loss) from equity investments | Income (loss) from equity investments | 9 | | | 48 | | | 5 | | | (1) | | | 0 | | | 0 | | | 0 | | | 61 | | Income (loss) from equity investments | 29 | | | (1) | | | (6) | | | — | | | — | | | — | | | — | | | 22 | |
LCM inventory valuation charge | 73 | | | 70 | | | 98 | | | 69 | | | 13 | | | 0 | | | 0 | | | 323 | | |
EBITDA | EBITDA | 614 | | | 374 | | | 304 | | | 69 | | | (107) | | | 168 | | | (16) | | | 1,406 | | EBITDA | 905 | | | 159 | | | 675 | | | 118 | | | 418 | | | 112 | | | (6) | | | 2,381 | |
Capital expenditures | Capital expenditures | 394 | | | 76 | | | 658 | | | 23 | | | 37 | | | 56 | | | 4 | | | 1,248 | | Capital expenditures | 104 | | | 109 | | | 265 | | | 12 | | | 12 | | | 27 | | | 3 | | | 532 | |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2021 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 2,564 | | | $ | 3,240 | | | $ | 2,531 | | | $ | 1,333 | | | $ | 1,741 | | | $ | 152 | | | $ | — | | | $ | 11,561 | |
Intersegment | 1,159 | | | 215 | | | 54 | | | 3 | | | 204 | | | 31 | | | (1,666) | | | — | |
| 3,723 | | | 3,455 | | | 2,585 | | | 1,336 | | | 1,945 | | | 183 | | | (1,666) | | | 11,561 | |
Income from equity investments | 35 | | | 102 | | | 11 | | | — | | | — | | | — | | | — | | | 148 | |
EBITDA | 1,576 | | | 708 | | | 596 | | | 129 | | | (81) | | | 92 | | | (2) | | | 3,018 | |
Capital expenditures | 82 | | | 47 | | | 245 | | | 15 | | | 20 | | | 20 | | | 2 | | | 431 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 4,884 | | | $ | 7,019 | | | $ | 6,990 | | | $ | 2,830 | | | $ | 5,961 | | | $ | 311 | | | $ | — | | | $ | 27,995 | |
Intersegment | 2,780 | | | 457 | | | 115 | | | 3 | | | 547 | | | 64 | | | (3,966) | | | — | |
| 7,664 | | | 7,476 | | | 7,105 | | | 2,833 | | | 6,508 | | | 375 | | | (3,966) | | | 27,995 | |
Income (loss) from equity investments | 62 | | | — | | | (11) | | | — | | | — | | | — | | | — | | | 51 | |
EBITDA | 1,816 | | | 347 | | | 1,221 | | | 243 | | | 566 | | | 215 | | | (7) | | | 4,401 | |
Capital expenditures | 236 | | | 198 | | | 428 | | | 30 | | | 26 | | | 56 | | | 4 | | | 978 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2021 |
Millions of dollars | O&P– Americas | | O&P– EAI | | I&D | | APS | | Refining | | Technology | | Other | | Total |
Sales and other operating revenues: | | | | | | | | | | | | | | | |
Customers | $ | 4,699 | | | $ | 6,080 | | | $ | 4,235 | | | $ | 2,602 | | | $ | 2,734 | | | $ | 293 | | | $ | — | | | $ | 20,643 | |
Intersegment | 1,883 | | | 422 | | | 117 | | | 4 | | | 337 | | | 55 | | | (2,818) | | | — | |
| 6,582 | | | 6,502 | | | 4,352 | | | 2,606 | | | 3,071 | | | 348 | | | (2,818) | | | 20,643 | |
Income from equity investments | 65 | | | 197 | | | 23 | | | — | | | — | | | — | | | — | | | 285 | |
| | | | | | | | | | | | | | | |
EBITDA | 2,443 | | | 1,120 | | | 778 | | | 264 | | | (191) | | | 186 | | | 3 | | | 4,603 | |
Capital expenditures | 147 | | | 87 | | | 390 | | | 35 | | | 45 | | | 42 | | | 25 | | | 771 | |
In April 2022 we announced our decision to cease operation of our Houston Refinery no later than December 31, 2023. We determined that exiting the refining business by the end of next year is the best strategic and financial path forward for the company. Our exit of the refining business progresses our decarbonization goals, and the site’s prime location gives us more options for advancing our future strategic objectives, including circularity. In the interim, we will continue serving the fuels market, which is expected to remain strong in the near-term, and consider potential transactions and alternatives for the site.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
In connection with the exit plan, we expect to incur certain costs primarily consisting of accelerated amortization of operating lease assets of approximately $300 million to $400 million, asset decommissioning costs of approximately $150 million to $250 million, personnel related costs of approximately $80 million to $120 million, and other charges of approximately $50 million to $100 million. As we intend to proceed with an orderly shut-down, we do not expect to recognize these charges all at once, but over time through 2024. The actual size and timing of costs associated with the closure may differ from our current expectations, and such differences may be material.
As of June 30, 2022, we had $428 million and $469 million of renewable identification numbers reflected in Prepaid expenses and other current assets and Accrued liabilities, respectively, for our Refinery segment.
In the second quarter of 2022 we sold our ownership interest in our polypropylene manufacturing facility located in Geelong, Australia, LyondellBasell Australia (Holdings) Pty Ltd, for consideration of $38 million. In connection with this sale, we assessed the net assets of the disposal group for impairment and determined that the carrying value exceeded the fair value less costs to sell. As a result, we recognized a non-cash impairment charge in the second quarter of 2022 of $69 million in the operating results of our O&P—EAI segment. The fair value measurement for the disposal group is based on expected consideration and classified as Level 3 within the fair value hierarchy. The charge is reflected as Impairments in our Consolidated Statements of Income.
A reconciliation of EBITDA to Income from continuing operations before income taxes is shown in the following table for each of the periods presented:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2021 | | 2022 | | 2021 |
EBITDA: | EBITDA: | | | | | | | | EBITDA: | | | | | | | |
Total segment EBITDA | Total segment EBITDA | $ | 3,020 | | | $ | 767 | | | $ | 4,600 | | | $ | 1,422 | | Total segment EBITDA | $ | 2,387 | | | $ | 3,020 | | | $ | 4,408 | | | $ | 4,600 | |
Other EBITDA | Other EBITDA | (2) | | | (7) | | | 3 | | | (16) | | Other EBITDA | (6) | | | (2) | | | (7) | | | 3 | |
Less: | Less: | | Less: | |
Depreciation and amortization expense | Depreciation and amortization expense | (330) | | | (356) | | | (665) | | | (698) | | Depreciation and amortization expense | (304) | | | (330) | | | (615) | | | (665) | |
Interest expense | Interest expense | (130) | | | (125) | | | (240) | | | (214) | | Interest expense | (58) | | | (130) | | | (132) | | | (240) | |
Add: | Add: | | Add: | |
Interest income | Interest income | 5 | | | 4 | | | 7 | | | 7 | | Interest income | 4 | | | 5 | | | 6 | | | 7 | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | $ | 2,563 | | | $ | 283 | | | $ | 3,705 | | | $ | 501 | | Income from continuing operations before income taxes | $ | 2,023 | | | $ | 2,563 | | | $ | 3,660 | | | $ | 3,705 | |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements, and the accompanying notes elsewhere in this report. Unless otherwise indicated, the “Company”, “we”, “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).
OVERVIEW
Our results demonstrate that we continue to be well positioned to benefit from the ongoing global economic recovery. In our O&P—Americas and O&P—EAI segments, strong demand supported price and margin improvements during the second quarter of 2021. During the second quarter we operated all of our available capacity at near full rates to begin rebuilding depleted industry-wide inventories and addressing our customers' backlogs. Our growth investments expanded the earnings power of2022 our global portfolio of businesses delivered higher sequential earnings. Our Intermediates & Derivatives segment delivered strong results. We ran our Houston refinery at a rate of nearly 95 percent to support increased demand for gasoline, diesel and contributedjet fuel. Olefins and polyolefins markets reflected distinct regional dynamics. While North America demand for our products used in consumer packaging end markets remained strong, volumes in Europe decreased. In China, markets remained weak due to our ability to generate a total of $1.9 billion in cash from operations during the quarter. Further, during the second quarter we raised our quarterly dividend by 7.6% while continuing to focus on deleveraging our balance sheet.zero-COVID measures and logistical challenges.
Significant items that affectedDuring the first six months of 2022 our results duringdeclined compared to the first six months of 2021, primarily due to lower results in our O&P—Americas segment driven by lower olefin margins, and in our O&P—EAI segment from lower polyolefins volumes, compressed margins and a decline in equity earnings. These declines were partially offset by higher margins in our Refining and Intermediates & Derivatives segments.
During the second quarter and first six months of 2021 relative to the second quarter2022 we generated $1,599 million and first six months of 2020 include:
•O&P—Americas results increased primarily due to olefin and polyolefin margin improvements;
•O&P—EAI results improved as a result of higher margins; and
•I&D results increased primarily driven by higher margins across most businesses.
Other noteworthy items since the beginning of the year include the following:
•In June 2021, invested $104$3,101 million to purchase a 50% interest in a joint venture with the China Petroleum & Chemical Corporation which will construct a new propylene oxide and styrene monomer unit in China; and
•Incash from operating activities, respectively. During the first six months of 2021, repaid $1,4502022 we returned $2,464 million to shareholders through the combination of a special dividend and $325an increased quarterly dividend and repurchased $262 million outstanding underworth of our Term Loan due 2022 and 4% Guaranteed Notes due 2023, respectively.shares.
Results of operations for the periods discussed are presented in the table below:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 11,561 | | | $ | 5,546 | | | $ | 20,643 | | | $ | 13,040 | | Sales and other operating revenues | $ | 14,838 | | | $ | 13,157 | | | | $ | 27,995 | | | $ | 20,643 | |
Cost of sales | Cost of sales | 8,676 | | | 4,894 | | | 16,354 | | | 11,762 | | Cost of sales | 12,267 | | | 11,136 | | | | 23,403 | | | 16,354 | |
| Impairments | | Impairments | 69 | | | — | | | | 69 | | | — | |
Selling, general and administrative expenses | Selling, general and administrative expenses | 327 | | | 288 | | | 614 | | | 583 | | Selling, general and administrative expenses | 329 | | | 328 | | | | 657 | | | 614 | |
Research and development expenses | Research and development expenses | 32 | | | 25 | | | 61 | | | 52 | | Research and development expenses | 32 | | | 32 | | | | 64 | | | 61 | |
Operating income | Operating income | 2,526 | | | 339 | | | 3,614 | | | 643 | | Operating income | 2,141 | | | 1,661 | | | | 3,802 | | | 3,614 | |
Interest expense | Interest expense | (130) | | | (125) | | | (240) | | | (214) | | Interest expense | (58) | | | (74) | | | | (132) | | | (240) | |
Interest income | Interest income | 5 | | | 4 | | | 7 | | | 7 | | Interest income | 4 | | | 2 | | | | 6 | | | 7 | |
Other income, net | 14 | | | 4 | | | 39 | | | 4 | | |
Other (expense) income, net | | Other (expense) income, net | (86) | | | 19 | | | | (67) | | | 39 | |
Income from equity investments | Income from equity investments | 148 | | | 61 | | | 285 | | | 61 | | Income from equity investments | 22 | | | 29 | | | | 51 | | | 285 | |
Income from continuing operations before income taxes | Income from continuing operations before income taxes | 2,563 | | | 283 | | | 3,705 | | | 501 | | Income from continuing operations before income taxes | 2,023 | | | 1,637 | | | | 3,660 | | | 3,705 | |
Provision for (benefit from) income taxes | 506 | | | (32) | | | 576 | | | 43 | | |
Provision for income taxes | | Provision for income taxes | 378 | | | 316 | | | | 694 | | | 576 | |
Income from continuing operations | Income from continuing operations | 2,057 | | | 315 | | | 3,129 | | | 458 | | Income from continuing operations | 1,645 | | | 1,321 | | | | 2,966 | | | 3,129 | |
Income (loss) from discontinued operations, net of tax | 2 | | | (1) | | | — | | | — | | |
Loss from discontinued operations, net of tax | | Loss from discontinued operations, net of tax | (1) | | | (1) | | | | (2) | | | — | |
Net income | Net income | $ | 2,059 | | | $ | 314 | | | $ | 3,129 | | | $ | 458 | | Net income | $ | 1,644 | | | $ | 1,320 | | | | $ | 2,964 | | | $ | 3,129 | |
Other comprehensive income (loss), net of tax – | | Other comprehensive income (loss), net of tax – | | | |
Financial derivatives | | Financial derivatives | 102 | | | 88 | | | | 190 | | | 97 | |
Unrealized losses on available-for-sale debt securities | | Unrealized losses on available-for-sale debt securities | — | | | — | | | | — | | | (1) | |
Defined benefit pension and other postretirement benefit plans | | Defined benefit pension and other postretirement benefit plans | 78 | | | 5 | | | | 83 | | | 28 | |
Foreign currency translations | | Foreign currency translations | (161) | | | (25) | | | | (186) | | | (30) | |
Total other comprehensive income, net of tax | | Total other comprehensive income, net of tax | 19 | | | 68 | | | | 87 | | | 94 | |
Comprehensive income | | Comprehensive income | $ | 1,663 | | | $ | 1,388 | | | | $ | 3,051 | | | $ | 3,223 | |
RESULTS OF OPERATIONS
Revenues—Revenues increased by $6,015$1,681 million, or 108%13%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $7,603$7,352 million or 58%,36% in the first six months of 20212022 compared to the first six months of 2020.2021. Average sales prices in the second quarter and first six months of 20212022 were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the corresponding periods in 2020.first quarter of 2022 and the first six months of 2021. These higher prices led to a 99%15% and 54%31% increase in revenue infor the second quarter and first six months of 2021,2022, respectively. FavorableHigher volumes driven by increased demand resulted in an 8% increase in Revenues in the first six months of 2022 compared to the first six months of 2021. Unfavorable foreign exchange impacts resulted in a revenue increase of2% and 3% and 4% duringdecrease in revenues for the second quarter and first six months of 2021,2022, respectively. Sales volumes were relatively unchanged in the first six months of 2021 compared to the first six months of 2020. In the second quarter of 2021, higher sales volumes resulted in a revenue increase of 6% relative to the second quarter of 2020 as a result of increased demand.
Cost of Sales—Cost of sales increased by $3,782$1,131 million, or 77%10%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $4,592$7,049 million, or 39%43%, in the first six months of 20212022 compared to the first six months of 2020, respectively. This increase2021. These increases were primarily related to higher feedstock and energy costs.
During the first six months of 2020, we recognized LCM inventory valuation charges of $323 million related to the decline in pricing for many of our raw material and finished goods inventories during the period. During the second quarter of 2020, we recognized a $96 million LCM inventory valuation benefit largely driven by the recovery of market prices of crude oil and refined products during the second quarter.
Operating Income—Operating income increased by $2,187$480 million, or 645%29%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022. Operating income in our Refining, I&D, O&P—Americas, Technology and APS segments increased $274 million, $167 million, $40 million, $13 million and $12 million, respectively. These increases were partially offset by $2,971a decrease in Operating income in our O&P— EAI segment of $17 million.
Operating income increased by $188 million, or 462%5%, in the first six months of 20212022 compared to the first six months of 2020. In the second quarter of 2021, operating2021. Operating income in our O&P–Americas, O&P–EAI,Refining, I&D and APSTechnology segments increased by $1,288$795 million, $470 million, $469$522 million, and $184$35 million, respectively, relative to the second quarter of 2020. Therespectively. These increases were partially offset by declines of $211 million and $22 milliondecreases in our Refining and Technology segments, respectively, in the second quarter of 2021 compared to the second quarter of 2020.
In the first six months of 2021, operatingOperating income in our O&P–&P—Americas, O&P–&P—EAI I&D,and APS and Technology segments increased by $1,737of $586 million, $594 million, $426 million, $218$551 million and $13$17 million, respectively, compared to the first six months of 2020. The increases were partially offset by a decline of $27 million in our Refining segment in the first six months of 2021 compared to the first six months 2020. respectively.
Results for each of our business segments are discussed further in the Segment Analysis section below.
Income from Equity Investments—Income from our equity investments increased $87decreased by $7 million, or 143%24%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $224$234 million, or 367%82%, in the second quarterfirst six months of 20212022 compared to the second quarterfirst six months of 2020.2021. The increasedecrease in the first six months of 2022 compared to the first six months of 2021 was primarilymainly attributable to margin compression as our integrated cracker joint venture in China remained challenged by weak markets due to increases in our O&P–EAI segment driven primarily by higher margins due to increased demand.zero-COVID measures and logistical challenges.
Income Taxes—Our effective income tax rate for the second quarter of 20212022 was 19.7%18.7% compared with -11.3%19.3% for the secondfirst quarter of 2020. Our2022. The lower effective income tax rate for the first six monthssecond quarter of 2021 was 15.5% compared2022 is primarily attributable to changes in unrecognized tax benefits associated with 8.6%uncertain tax positions which resulted in a 0.6% decrease in our effective tax rate.
Our effective income tax rates for the first six months of 2020. 2022 was 19.0% compared to 15.5% for the first six months of 2021. In the first six months of 2021, we benefited from return to accrual adjustments primarily associated with a step-up of certain Italian assets to fair market value and benefits resulting from the CARES Act of 3.2% and 2.0%, respectively; such benefits did not impact our effective tax rate in the first six months of 2022. These increases were partially offset by a 1.1% decrease in our effective income tax rate due to changes in pre-tax income in countries with varying statutory tax rates.
Our income tax results are discussed further in Note 89 to the Consolidated Financial Statements.
Comprehensive Income—Comprehensive income increased by $1,706$275 million in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and decreased by $3,240$172 million in the first six months of 20212022 compared to the first six months of 2020. These changes were2021, primarily due to higherchanges in net income. The activity from the remaining components in Comprehensive income and financial derivatives activity.is discussed below.
Financial derivatives—In the second quarter and first six months of 2022, the cumulative after-tax effects of our derivatives designated as cash flow hedges were net gains of $102 million and $190 million, respectively. Pre-tax gains of $146 million and $258 million, respectively, related to forward-starting interest rate swaps were driven by periodic changes in benchmark interest rates in the second quarter and first six months of 2022. The strengthening of the U.S. dollar against the euro and the periodic changes in benchmark interest rates, in the second quarter and first six months of 2022, resulted in pre-tax gains of $75 million and $84 million, respectively, related to our cross-currency swaps. Pre-tax losses of $77 million and $102 million, related to our cross-currency swaps were reclassified from Accumulated other comprehensive loss to Interest expense in the second quarter and first six months of 2022, respectively. The remaining change pertains to our commodity cash flow hedges.
In the first quarter of 2022 and the first six months of 2021, the cumulative after-tax effects of our derivatives designated as cash flow hedges were net lossesgains of $78$88 million and net gains of $97 million, respectively. Pre-tax lossesgains of $123$112 million and pre-tax gains of $100 million, related to forward-starting interest rate swaps were driven by periodic changes in benchmark interest rates in the secondfirst quarter of 2022 and the first six months of 2021, respectively. The fluctuations of the U.S. dollar against the euro and the periodic changes in benchmark interest rates, in the secondfirst quarter of 2022 and the first six months of 2021, resulted in pre-tax lossesgains of $22$9 million and pre-tax gains of $64 million, respectively, related to our cross-currency swaps. Pre-tax gainslosses of $24$25 million and pre-tax losses of $68 million, related to our cross-currency swaps were reclassified from Accumulated other comprehensive loss to Interest expense in the secondfirst quarter of 2022 and the first six months of 2021, respectively. The remaining change pertains to our commodity cash flow hedges.
Defined benefit pension and other postretirement benefit plans—In the second quarter and first six months of 2020, the cumulative after-tax effects of our derivatives designated as cash flow hedges were net losses of $364 million. Included was2022, we recognized defined benefit pension and other postretirement benefit plans pre-tax losses of $532 million related to forward-starting interest rate swaps, driven by the significant decline in benchmark interest ratesgains in the first quarteramount of 2020,$101 million and $109 million, respectively, primarily due to changesa pre-tax pension settlement of $94 million that was reclassified from Accumulated other comprehensive loss to Other (expense) income, net, in the economy impacting late in the firstsecond quarter of 2020.2022. For additional information, see Note 8 to our Consolidated Financial Statements.
Foreign currency translations—The predominant functional currency for our operations outside of the U.S. is the euro. Relative to the U.S. dollar, the value of the euro strengthenedweakened in the second quarter of 2021, resulting in net gains reflected in the Consolidated Statements of Comprehensive Income. During theand first six months of 2021, the value of the euro decreased relative to the U.S. dollar,2022, resulting in cumulative year-to-date net losses reflected in the Consolidated Statements of Comprehensive Income. The gains andnet losses related to unrealized changes in foreign currency translation impacts include pre-tax gains of $13$202 million and $75$237 million, in the second quarter and first six months of 2021,2022, respectively, which represent the effective portion of our net investment hedges. In the first six months of 2020, relative
Relative to the U.S. dollar, the value of the euro decreasedweakened in the first quarter of 2022 and the first six months of 2021, resulting in net losses reflected in the Consolidated Statements of Comprehensive Income. The net losses related to unrealized changes in foreign currency translation include pre-tax gains of $35 million and $75 million, in the first quarter of 2022 and first six month of 2021, respectively, with represent the effective portion of our net investment hedges.
Segment Analysis
We use earnings from continuing operations before interest, income taxes, and depreciation and amortization (“EBITDA”) as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of and allocate resources to our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefits other than service costs are included in “Other”. For additional information related to our operating segments, as well as a reconciliation of EBITDA to its nearest GAAP measure, Income from continuing operations before income taxes, see Note 1213 to our Consolidated Financial Statements.
Revenues and the components of EBITDA for the periods presented are reflected in the table below:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues: | Sales and other operating revenues: | | | | | | | | Sales and other operating revenues: | | | | | | | | |
O&P–Americas segment | $ | 3,723 | | | $ | 1,433 | | | $ | 6,582 | | | $ | 3,225 | | |
O&P–EAI segment | 3,455 | | | 1,702 | | | 6,502 | | | 3,926 | | |
O&P—Americas segment | | O&P—Americas segment | $ | 4,069 | | | $ | 3,595 | | | | $ | 7,664 | | | $ | 6,582 | |
O&P—EAI segment | | O&P—EAI segment | 3,714 | | | 3,762 | | | | 7,476 | | | 6,502 | |
I&D segment | I&D segment | 2,585 | | | 1,157 | | | 4,352 | | | 2,927 | | I&D segment | 3,766 | | | 3,339 | | | | 7,105 | | | 4,352 | |
APS segment | APS segment | 1,336 | | | 705 | | | 2,606 | | | 1,801 | | APS segment | 1,425 | | | 1,408 | | | | 2,833 | | | 2,606 | |
Refining segment | Refining segment | 1,945 | | | 919 | | | 3,071 | | | 2,367 | | Refining segment | 3,788 | | | 2,720 | | | | 6,508 | | | 3,071 | |
Technology segment | Technology segment | 183 | | | 177 | | | 348 | | | 299 | | Technology segment | 194 | | | 181 | | | | 375 | | | 348 | |
Other, including intersegment eliminations | Other, including intersegment eliminations | (1,666) | | | (547) | | | (2,818) | | | (1,505) | | Other, including intersegment eliminations | (2,118) | | | (1,848) | | | | (3,966) | | | (2,818) | |
Total | Total | $ | 11,561 | | | $ | 5,546 | | | $ | 20,643 | | | $ | 13,040 | | Total | $ | 14,838 | | | $ | 13,157 | | | | $ | 27,995 | | | $ | 20,643 | |
Operating income (loss): | Operating income (loss): | | | | | | | | Operating income (loss): | | | | | | | | |
O&P–Americas segment | $ | 1,395 | | | $ | 107 | | | $ | 2,082 | | | $ | 345 | | |
O&P–EAI segment | 551 | | | 81 | | | 810 | | | 216 | | |
O&P—Americas segment | | O&P—Americas segment | $ | 768 | | | $ | 728 | | | | $ | 1,496 | | | $ | 2,082 | |
O&P—EAI segment | | O&P—EAI segment | 121 | | | 138 | | | | 259 | | | 810 | |
I&D segment | I&D segment | 493 | | | 24 | | | 581 | | | 155 | | I&D segment | 635 | | | 468 | | | | 1,103 | | | 581 | |
APS segment | APS segment | 101 | | | (83) | | | 205 | | | (13) | | APS segment | 100 | | | 88 | | | | 188 | | | 205 | |
Refining segment | Refining segment | (95) | | | 116 | | | (225) | | | (198) | | Refining segment | 422 | | | 148 | | | | 570 | | | (225) | |
Technology segment | Technology segment | 82 | | | 104 | | | 164 | | | 151 | | Technology segment | 106 | | | 93 | | | | 199 | | | 164 | |
Other, including intersegment eliminations | Other, including intersegment eliminations | (1) | | | (10) | | | (3) | | | (13) | | Other, including intersegment eliminations | (11) | | | (2) | | | | (13) | | | (3) | |
Total | Total | $ | 2,526 | | | $ | 339 | | | $ | 3,614 | | | $ | 643 | | Total | $ | 2,141 | | | $ | 1,661 | | | | $ | 3,802 | | | $ | 3,614 | |
Depreciation and amortization: | Depreciation and amortization: | | | | | | | | Depreciation and amortization: | | | | | | | | |
O&P–Americas segment | $ | 142 | | | $ | 133 | | | $ | 285 | | | $ | 257 | | |
O&P–EAI segment | 50 | | | 53 | | | 103 | | | 106 | | |
O&P—Americas segment | | O&P—Americas segment | $ | 144 | | | $ | 144 | | | | $ | 288 | | | $ | 285 | |
O&P—EAI segment | | O&P—EAI segment | 42 | | | 47 | | | | 89 | | | 103 | |
I&D segment | I&D segment | 81 | | | 74 | | | 161 | | | 144 | | I&D segment | 81 | | | 81 | | | | 162 | | | 161 | |
APS segment | APS segment | 27 | | | 39 | | | 55 | | | 83 | | APS segment | 25 | | | 29 | | | | 54 | | | 55 | |
Refining segment | Refining segment | 19 | | | 49 | | | 38 | | | 91 | | Refining segment | 2 | | | — | | | | 2 | | | 38 | |
Technology segment | Technology segment | 11 | | | 8 | | | 23 | | | 17 | | Technology segment | 10 | | | 10 | | | | 20 | | | 23 | |
Total | Total | $ | 330 | | | $ | 356 | | | $ | 665 | | | $ | 698 | | Total | $ | 304 | | | $ | 311 | | | | $ | 615 | | | $ | 665 | |
Income (loss) from equity investments: | Income (loss) from equity investments: | | | | | | | | Income (loss) from equity investments: | | | | | | | | |
O&P–Americas segment | $ | 35 | | | $ | 7 | | | $ | 65 | | | $ | 9 | | |
O&P–EAI segment | 102 | | | 51 | | | 197 | | | 48 | | |
O&P—Americas segment | | O&P—Americas segment | $ | 29 | | | $ | 33 | | | | $ | 62 | | | $ | 65 | |
O&P—EAI segment | | O&P—EAI segment | (1) | | | 1 | | | | — | | | 197 | |
I&D segment | I&D segment | 11 | | | 3 | | | 23 | | | 5 | | I&D segment | (6) | | | (5) | | | | (11) | | | 23 | |
APS segment | — | | | — | | | — | | | (1) | | |
| Total | Total | $ | 148 | | | $ | 61 | | | $ | 285 | | | $ | 61 | | Total | $ | 22 | | | $ | 29 | | | | $ | 51 | | | $ | 285 | |
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Other income (loss), net: | | | | | | | | |
O&P–Americas segment | $ | 4 | | | $ | 1 | | | $ | 11 | | | $ | 3 | | |
O&P–EAI segment | 5 | | | — | | | 10 | | | 4 | | |
Other (expense) income, net: | | Other (expense) income, net: | | | | | | | | |
O&P—Americas segment | | O&P—Americas segment | $ | (36) | | | $ | 6 | | | | $ | (30) | | | $ | 11 | |
O&P—EAI segment | | O&P—EAI segment | (3) | | | 2 | | | | (1) | | | 10 | |
I&D segment | I&D segment | 11 | | | — | | | 13 | | | — | | I&D segment | (35) | | | 2 | | | | (33) | | | 13 | |
APS segment | APS segment | 1 | | | — | | | 4 | | | — | | APS segment | (7) | | | 8 | | | | 1 | | | 4 | |
Refining segment | Refining segment | (5) | | | — | | | (4) | | | — | | Refining segment | (6) | | | — | | | | (6) | | | (4) | |
Technology segment | Technology segment | (1) | | | — | | | (1) | | | — | | Technology segment | (4) | | | — | | | | (4) | | | (1) | |
Other, including intersegment eliminations | Other, including intersegment eliminations | (1) | | | 3 | | | 6 | | | (3) | | Other, including intersegment eliminations | 5 | | | 1 | | | | 6 | | | 6 | |
Total | Total | $ | 14 | | | $ | 4 | | | $ | 39 | | | $ | 4 | | Total | $ | (86) | | | $ | 19 | | | | $ | (67) | | | $ | 39 | |
EBITDA: | EBITDA: | | | | | | | | EBITDA: | | | | | | | | |
O&P–Americas segment | $ | 1,576 | | | $ | 248 | | | $ | 2,443 | | | $ | 614 | | |
O&P–EAI segment | 708 | | | 185 | | | 1,120 | | | 374 | | |
O&P—Americas segment | | O&P—Americas segment | $ | 905 | | | $ | 911 | | | | $ | 1,816 | | | $ | 2,443 | |
O&P—EAI segment | | O&P—EAI segment | 159 | | | 188 | | | | 347 | | | 1,120 | |
I&D segment | I&D segment | 596 | | | 101 | | | 778 | | | 304 | | I&D segment | 675 | | | 546 | | | | 1,221 | | | 778 | |
APS segment | APS segment | 129 | | | (44) | | | 264 | | | 69 | | APS segment | 118 | | | 125 | | | | 243 | | | 264 | |
Refining segment | Refining segment | (81) | | | 165 | | | (191) | | | (107) | | Refining segment | 418 | | | 148 | | | | 566 | | | (191) | |
Technology segment | Technology segment | 92 | | | 112 | | | 186 | | | 168 | | Technology segment | 112 | | | 103 | | | | 215 | | | 186 | |
Other, including intersegment eliminations | Other, including intersegment eliminations | (2) | | | (7) | | | 3 | | | (16) | | Other, including intersegment eliminations | (6) | | | (1) | | | | (7) | | | 3 | |
Total | Total | $ | 3,018 | | | $ | 760 | | | $ | 4,603 | | | $ | 1,406 | | Total | $ | 2,381 | | | $ | 2,020 | | | | $ | 4,401 | | | $ | 4,603 | |
Olefins and Polyolefins–Polyolefin—Americas Segment
Overview—EBITDA improved in the second quarter andof 2022 remained relatively unchanged compared to first quarter of 2022 as decreases in olefins margins were offset by increases in polyethylene margins. EBITDA decreased in the first six months of 2022 relative to the first six months of 2021 relative to the second quarter and first six months of 2020primarily driven by olefin and polyolefin margin improvements.lower olefins margins.
Ethylene Raw Materials—We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. In the second and first quarter of 2022, and the first six months of 20212022 and 20202021, approximately 65% to 75% of the raw materials used in our North American crackers was ethane.
The following table sets forth selected financial information for the O&P–&P—Americas segment including Income from equity investments, which is a component of EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 |
Sales and other operating revenues | $ | 3,723 | | | $ | 1,433 | | | $ | 6,582 | | | $ | 3,225 | |
Income from equity investments | 35 | | | 7 | | | 65 | | | 9 | |
EBITDA | 1,576 | | | 248 | | | 2,443 | | | 614 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | March 31, | | | | June 30, | | June 30, |
Millions of dollars | 2022 | | 2022 | | | | 2022 | | 2021 |
Sales and other operating revenues | $ | 4,069 | | | $ | 3,595 | | | | | $ | 7,664 | | | $ | 6,582 | |
Income from equity investments | 29 | | | 33 | | | | | 62 | | | 65 | |
EBITDA | 905 | | | 911 | | | | | 1,816 | | | 2,443 | |
RevenuesRevenue—Revenues for our O&P–&P—Americas segment increased by $2,290$474 million, or 160%13%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and increased by $3,357$1,082 million, or 104%16%, in the first six months of 20212022 compared to the first six months of 2020.2021.
Second quarter of 2022 versus first quarter of 2022—Higher sales volume resulted in a 8% increase in revenue due to the absence of planned and unplanned outages compared to the first quarter of 2022. Higher average sales prices resulted in a 146% and 93%5% increase in revenue primarily driven by an increase in polymer prices from supply constraints across the second quarter andindustry.
First six months of 2022 versus first six months of 2021 respectively,—Higher average sales prices resulted in a 13% increase in revenue primarily driven by tight market conditions. Volume improvementsconditions and lower supply. Higher sales volume resulted in a revenue increase of 14% and 11% in3% as the second quarter and first six months of 2021 respectively, duewas impacted by the effects of unusually cold temperatures and associated electrical power outages that led to improved demandshutdowns of manufacturing facilities in combination with industry-wide supply constraints.Texas.
EBITDA—EBITDA increaseddecreased by $1,328$6 million, or 535%1%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and decreased by $1,829$627 million, or 298%26%, in the first six months of 20212022 compared to the first six months of 2020. Higher2021.
Second quarter of 2022 versus first quarter of 2022— Lower olefin results led to a 350% and 195% increase10% decrease in EBITDA in the second quarter and first six months of 2021, respectively. This increase was primarily due to margin improvements aslower margins driven by higher ethyleneethane and propylene prices outpaced increasesenergy costs coupled with a decline in feedstock costs.the average sales price of ethylene. Higher polyethylene results led to a 135% and 53%10% increase in EBITDA primarily due to higher margins driven by higher average sale price.
First six months of 2022 versus first six months of 2021—Lower olefin results led to a 27% decrease in EBITDA due to lower margins driven by higher feedstock and energy costs coupled with a decline in the average sales price of ethylene.
Olefins and Polyolefin—Europe, Asia, International Segment
Overview—EBITDA decreased in the second quarter of 2022 compared to the first quarter of 2022 due to recognition of non-cash impairment charges and lower polypropylene results partially offset by higher olefins margins. EBITDA decreased in the first six months of 2022 relative to the first six months of 2021 respectively, while polypropylene results led to a 58% and 30% increase in EBITDA in the second quarter and first six months of 2021, respectively. These improvements were primarily due to polyolefin sales price increases which outpaced higher feedstock costs. Income from our equity method investments lead to a 11% and 9% increase in EBITDA due to improved results at our Indelpro joint venture in Mexico.
Results for the first six months of 2020 included a $73 million LCM inventory valuation charge primarily driven by a decline in the price of heavy liquids and ethylene. Results in the second quarter of 2020 included a $38 million LCM inventory valuation benefit related to the reversal of LCM inventory valuation charges recognized in the first quarter of 2020, largely driven by recovery of market prices of heavy liquids and ethylene which were partially offset by declines in the price of polymers. The absence of similar adjustments in the first six months and second quarter 2021 resulted in a 12% and 15% change in EBITDA, respectively.
Olefins and Polyolefins–Europe, Asia, International Segment
Overview—EBITDA increased for the second quarter and first six months of 2021 relative to the second quarter and first six months of 2020 mainly as a result of higherlower volumes and margins across all businesses, lower income from equity investments and equity income.the unfavorable impacts of foreign exchange.
While
During the majority of the feedstock used in our EAI segment’s ethylene crackers is naphtha, in thefirst and second quarter of 2022, we had planned and firstunplanned maintenance resulting in ethylene cracker operating rates of approximately 70% to 75% of capacity compared to 97% of capacity during the six months of 2021ended June 30, 2021.
Ethylene Raw Materials—In Europe, naphtha is the primary raw material for our ethylene production and 2020represented approximately 30-40%65% to 70% of the raw materials used in our crackers were advantaged feedstocks.the second and first quarter of 2022 and the first six months of 2022 and 2021.
The following table sets forth selected financial information for the O&P–&P—EAI segment including Income (loss) from equity investments, which is a component of EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 3,455 | | | $ | 1,702 | | | $ | 6,502 | | | $ | 3,926 | | Sales and other operating revenues | $ | 3,714 | | | $ | 3,762 | | | | $ | 7,476 | | | $ | 6,502 | |
Income (loss) from equity investments | 102 | | | 51 | | | 197 | | | 48 | | |
(Loss) income from equity investments | | (Loss) income from equity investments | (1) | | | 1 | | | | — | | | 197 | |
EBITDA | EBITDA | 708 | | | 185 | | | 1,120 | | | 374 | | EBITDA | 159 | | | 188 | | | | 347 | | | 1,120 | |
Revenues
Revenue—Revenues increaseddecreased by $1,753$48 million, or 103%1%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and increased by $2,576$974 million, or 66%15%, in the first six months of 20212022 compared to the first six months of 2020. Average2021.
Second quarter of 2022 versus first quarter of 2022—Lower volume resulted in a revenue decrease of 8% primarily due to lower demand. Unfavorable foreign exchange impacts resulted in a revenue decrease of 4%. Higher average sales prices resulted in the second quarter and first six months of 2021 were higher across most productsa 11% increase in revenue as sales prices generally correlate with crude oil prices, which on average, increased compared to the same period in 2020. These higher average sales prices were responsible for a revenue increasefirst quarter of 86% and 47% in the second quarter and2022.
First six months of 2022 versus first six months of 2021 respectively. Volume improvements—Higher average sales prices resulted in a 25% increase in revenue as sales prices generally correlate with crude oil prices, which on average, increased compared to the first six months of 2021. Lower volumes resulted in a revenue increasedecrease of 10% and 12% increase in sales in the second quarter and first six months of 2021, respectively,4% primarily due to strong polymer demand in combination with tight market supply. Favorablelower demand. Unfavorable foreign exchange impacts resulted in a revenue increasedecrease of 7%6%.
EBITDA—EBITDA decreased by $29 million, or 15%, in each of the second quarter of 2022 compared to the first quarter of 2022 and by $773 million, or 69%, in the first six months of 2022 compared to the first six months of 2021.
In the second quarter of 2022, we recognized a $69 million non-cash impairment charge in conjunction with the sale of our polypropylene manufacturing facility located in Australia, see Note 13 to the Consolidated Financial Statements for additional information. This charge resulted in a 37% and 6% decrease in EBITDA for the second quarter of 2022 compared to the first quarter of 2022 and the first six months of 2022 compared to the first six months of 2021, respectively.
Second quarter of 2022 versus first quarter of 2022— Lower polypropylene results led to a 25% decrease in EBITDA. Approximately 60% of this change was driven by lower volumes due to lower demand with the remainder due to lower margins as a result of lower spreads. Higher olefins results led to a 48% increase in EBITDA primarily driven by higher margins as a result of by higher ethylene and co-product prices.
First six months of 2022 versus first six months of 2021—Lower olefins results led to a 18% decrease in EBITDA. Approximately 55% of the change was driven by lower volumes due to planned and unplanned maintenance with the remainder due to lower margins resulting from higher feedstock and energy costs which outpaced increased ethylene prices. Lower income from our equity investments led to a decrease in EBITDA of 18% mainly attributable to margin compression driven by decreased demand and lower sales prices in Asia. Lower polypropylene and polyethylene results led to a 12% and 8% decrease in EBITDA, respectively, which was equally impacted by lower volumes due to lower demand and decreased margins resulting from higher energy costs. Unfavorable foreign exchange impacts resulted in a 7% decrease in EBITDA.
EBITDA—EBITDA increased by $523 million, or 283%, in the second quarter of 2021 compared to the second quarter of 2020 and by $746 million, or 199%, in the first six months of 2021 compared to the first six months of 2020. Polyethylene results led to a 96% and 74% increase in EBITDA in the second quarter and first six months of 2021, respectively while polypropylene results led to a 86% and 61% increase in EBITDA in the second quarter and first six months of 2021, respectively. These improvements were largely attributed to higher margins due to strong demand and tight markets. Higher olefins results led to a 52% increase in EBITDA in the second quarter of 2021 primarily driven by higher margins attributable to increased ethylene price which outpaced an increase in feedstock costs. Higher income from our equity investments led to increases in EBITDA of 28% and 40% in the second quarter and first six months of 2021, respectively, mainly attributable to higher polyolefins margins associated with increased demand. Favorable foreign exchange impacts resulted in a 8% and 9% increase in EBITDA in the second quarter and first six months of 2021, respectively.
Results for the second quarter and first six months of 2020 included LCM inventory valuation charges of $34 million and $70 million, respectively, resulting from a decline in the price of naphtha in the first quarter of 2020 and a decline in the price of polymers in the second quarter of 2020. The absence of similar charges in the second quarter and first six months of 2021 resulted in a 18% and 19% change in EBITDA, respectively.
Intermediates and Derivatives Segment
Overview—EBITDA increased in the second quarter of 2022 compared to the first quarter of 2022 and in the first six months of 2022 compared to the first six months of 2021, compared to the second quarter and first six months of 2020, primarily driven by higher margins across most businessesoxyfuels & related products margin improvements due to tight market supply from industry outages coupled with strong demand recovery.higher prices.
The following table sets forth selected financial information for the I&D segment including Income from equity investments, which is a component of EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 2,585 | | | $ | 1,157 | | | $ | 4,352 | | | $ | 2,927 | | Sales and other operating revenues | $ | 3,766 | | | $ | 3,339 | | | | $ | 7,105 | | | $ | 4,352 | |
Income from equity investments | 11 | | | 3 | | | 23 | | | 5 | | |
(Loss) income from equity investments | | (Loss) income from equity investments | (6) | | | (5) | | | | (11) | | | 23 | |
EBITDA | EBITDA | 596 | | | 101 | | | 778 | | | 304 | | EBITDA | 675 | | | 546 | | | | 1,221 | | | 778 | |
Revenues
Revenue—Revenues increased by $1,428$427 million, or 123%13%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $1,425,$2,753 million, or 49%63%, in the first six months of 20212022 compared to the first six months of 2020. 2021.
Second quarter of 2022 versus first quarter of 2022—Higher average sales prices resulted in a 110% and 51%21% increase in revenue as sales prices generally correlate with crude oil prices, which, on average, increased compared to the first quarter of 2022. Sales volumes declined resulting in the second quarter anda 6% decrease in revenue, largely due to prolonged outages at our acetyls facilities. Unfavorable foreign exchange impacts resulted in a revenue decrease of 2%.
First six months of 2022 versus first six months of 2021 respectively,—Higher average sales prices resulted in a 46% increase in revenue as sales prices generally correlate with crude oil prices, which, on average, increased compared to the same periodsperiod in 2020. Higher sales volumes driven by strong product demand across most businesses resulted in a 10% increase in sales in the second quarter of 2021. Sales volumes in the six months of 2021 declinedimproved resulting in a 5% decrease20% increase in revenue, mainly due to absence of the impact of unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas in early 2021. FavorableUnfavorable foreign exchange impacts resulted in a revenue increasedecrease of 3%.
EBITDA—EBITDA increased by $129 million, or 24%, in each of the second quarter of 2022 compared to the first quarter of 2022 and by $443 million, or 57%, in the first six months of 2022 compared to the first six months of 2021.
EBITDA
—EBITDA increased by $495 million, or 490%, inIn the second quarter of 2021 compared2022, we recognized a non-cash pension settlement loss of $37 million, see Note 8 to the Consolidated Financial Statements for additional information.This loss resulted in a 7% and 5% decrease in EBITDA for the second quarter of 20202022 compared to the first quarter of 2022 and by $474 million, or 156%, in the first six months of 20212022 compared to the first six months of 2020. Propylene oxide and derivatives results increased by 205% and 60% in the second2021, respectively.
Second quarter andof 2022 versus first six monthsquarter of 2021, respectively. This increase was primarily a result of higher margins due to strong demand recovery coupled with tight market supply resulting from industry outages. Similar market conditions drove an increase in margins for intermediate chemicals which resulted in a 153% and 44% increase in EBITDA for the second quarter and first six months of 2021, respectively. 2022—Oxyfuels and related products results increased 99% and 10% in the second quarter and first six monthsled to an EBITDA increase of 2021, respectively,48% primarily driven by margin improvement as a result of higher product prices and lower costs. Propylene oxide and derivatives results led to decreases in EBITDA of 17% due to lower margins driven by lower demand and gasolineprices.
First six months of 2022 versus first six months of 2021—Oxyfuels and related products results increased EBITDA by 44% primarily driven by margin improvement as a result of improved demand and prices. FavorablePropylene oxide and derivatives results increased EBITDA by 19% equally driven by both volume and margin improvements upon tight market supply and strong demand. Intermediate chemicals results improved resulting in an EBITDA increase of 13% as a result of higher margins due to tight market supply resulting from industry outages. Unfavorable foreign exchange impacts resulted in a 3% andEBITDA decrease of 4% increase in EBITDA in the second quarter and first six months of 2021, respectively..
In the first six months of 2020 EBITDA included a $98 million LCM inventory valuation charge primarily driven by a decline in the price of various gasoline blending components, butane, benzene and styrene during the period. EBITDA in the second quarter of 2020 included a $20 million LCM inventory valuation charge primarily driven by a decline in the price of benzene and styrene, despite price improvements for various gasoline blending components and butane since the first quarter of 2020. The absence of similar charges in the first six months and second quarter 2021 resulted in a 32% and 20% change in EBITDA, respectively.
Planned maintenance in 2021 is expected to reduce EBITDA by approximately $115 million, which is $30 million lower than previously estimated in 2020, due to reduced scope of work and associated downtime for the maintenance.
Advanced Polymer Solutions Segment
Overview—EBITDA for our APS segment increasedResults in the second quarter of 2022 relative to the first quarter of 2022 and in the first six months of 2022 relative to the first six months of 2021 relative to the second quarter and first six months of 2020, primarilywere slightly lower due to higher volumes.a decline in compounding and solutions results partially offset by improved advanced polymer results.
The following table sets forth selected financial information for the APS segment including losses from equity investments, which is a component of EBITDA:segment:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 1,336 | | | $ | 705 | | | $ | 2,606 | | | $ | 1,801 | | Sales and other operating revenues | $ | 1,425 | | | $ | 1,408 | | | | $ | 2,833 | | | $ | 2,606 | |
Income (loss) from equity investments | — | | | — | | | — | | | (1) | | |
| EBITDA | EBITDA | 129 | | | (44) | | | 264 | | | 69 | | EBITDA | 118 | | | 125 | | | | 243 | | | 264 | |
RevenuesRevenue—Revenues increased by $631$17 million, or 90%1%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $805,$227 million, or 45%9%, in the first six months of 20212022 compared to the first six months of 2021. Sales volumes increased resulting in a 44% and 20% increase in revenue in the second
Second quarter andof 2022 versus first six monthsquarter of 2021 stemming from higher automotive and construction demand. 2022—Average sales price increased resulting in a 37% and 16%9% increase in revenue in the second quarter and first six months of 2021, respectively, as sales prices generally correlate with crude oil prices, which, on average, increased compared to the same periodsfirst quarter of 2022. Sales volumes decreased resulting in 2020.a 4% decrease in revenue stemming from constraints in automotive production as a result of component shortages. Foreign exchange impacts resulted in a revenue decrease of 4%.
First six months of 2022 versus first six months of 2021—Average sales price increased resulting in a 21% increase in revenue as sales prices generally correlate with crude oil prices, which, on average, increased compared to the first six months of 9%2021. Sales volumes decreased resulting in eacha 5% decrease in revenue stemming from constraints in automotive production as described above. Foreign exchange impacts resulted in a revenue decrease of 7%.
EBITDA—EBITDA decreased by $7 million, or 6%, in the second quarter of 2022 compared to the first quarter of 2022 and by $21 million, or 8%, in the first six months of 2022 compared to the first six months of 2021.
EBITDA—EBITDA increased by $173 million, or 393%, inIn the second quarter of 2021 compared2022, we recognized a non-cash pension settlement loss of $8 million, see Note 8 to the Consolidated Financial Statements for additional information. This loss resulted in a 6% and 3% decrease in EBITDA for the second quarter of 20202022 compared to the first quarter of 2022 and by $195 million, or 283%, in the first six months of 20212022 compared to the first six months of 2020. Increased compounding2021, respectively.
Second quarter of 2022 versus first quarter of 2022—Compounding and solutions results led to an EBITDA increasedecrease of 164% and 119% in the second quarter and first six months of 2021, respectively,17% primarily due to volume improvements driven by higher demand.lower volumes as described above. Increased advanced polymerpolymers results led to an EBITDA increase of 64%18% due to higher margins driven by higher demand and 36%, in the second quarter andsales prices.
First six months of 2022 versus first six months of 2021 respectively, mainly attributable—Compounding and solutions results led to higheran EBITDA decrease of 13% primarily due to lower volumes as described above. Advanced polymers results improved by 11% driven by margin improvements due to increased demand for our products utilized in the automotive and construction end markets.
Results for the second quarter and first six months of 2020 included LCM inventory valuation charges of $67 million and $69 million, respectively, resulting from a decline in the price of polymers during the periods. The absence of similar charges in the second quarter and first six months of 2021spreads. Unfavorable foreign exchange impacts resulted in a 152% and 100% change in EBITDA respectively.decrease of 6%.
Refining Segment
Overview—EBITDA decreasedincreased in the second quarter of 2022 relative to the first quarter of 2022 and in the first six months of 2022 compared to the first six months of 2021 relative to the second quarter and first six months of 2020, primarily due to lowerhigher margins.
The following table sets forth selected financial information and heavy crude oil processing rates for the Refining segment and the U.S. refining market margins for the applicable periods. “Brent” is a light sweet crude oil and is one of the main benchmark prices for purchases of oil worldwide. “Maya” is a heavy sour crude oil grade produced in Mexico that is a relevant benchmark for heavy sour crude oils in the U.S. Gulf Coast market. References to industry benchmarks for refining market margins are to industry prices reported by Platts, a division of S&P Global.
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 1,945 | | | $ | 919 | | | $ | 3,071 | | | $ | 2,367 | | Sales and other operating revenues | $ | 3,788 | | | $ | 2,720 | | | | $ | 6,508 | | | $ | 3,071 | |
EBITDA | EBITDA | (81) | | | 165 | | | (191) | | | (107) | | EBITDA | 418 | | | 148 | | | | 566 | | | (191) | |
| Thousands of barrels per day | Thousands of barrels per day | | Thousands of barrels per day | | | |
Heavy crude oil processing rates | Heavy crude oil processing rates | 248 | | | 237 | | | 200 | | | 231 | | Heavy crude oil processing rates | 252 | | | 255 | | | | 254 | | | 200 | |
| Market margins, dollars per barrel | Market margins, dollars per barrel | | Market margins, dollars per barrel | | | |
Brent - 2-1-1 | Brent - 2-1-1 | $ | 15.32 | | | $ | 4.42 | | | $ | 12.95 | | | $ | 5.87 | | Brent - 2-1-1 | $ | 47.83 | | | $ | 22.31 | | | | $ | 35.08 | | | $ | 12.95 | |
Brent - Maya differential | Brent - Maya differential | 6.14 | | | 8.85 | | | 5.44 | | | 9.32 | | Brent - Maya differential | 8.00 | | | 8.51 | | | | 8.25 | | | 5.44 | |
Total Maya 2-1-1 | Total Maya 2-1-1 | $ | 21.46 | | | $ | 13.27 | | | $ | 18.39 | | | $ | 15.19 | | Total Maya 2-1-1 | $ | 55.83 | | | $ | 30.82 | | | | $ | 43.33 | | | $ | 18.39 | |
RevenuesRevenue—Revenues increased by $1,026$1,068 million, or 112%39%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $704$3,437 million, or 30%112%, in the first six months of 20212022 compared to the first six months of 2020. 2021.
Second quarter of 2022 versus first quarter of 2022—Higher product prices led to a revenue increase of 116% and 48% in the second quarter and first six months of 2021, respectively,39% due to an average Brent crude oil price increase of approximately $36 and $23$14 per barrel in the second quarter andbarrel.
First six months of 2022 versus first six months of 2021 respectively.This—Higher product prices led to a revenue increase was partially offset byof 87% due to an average Brent crude oil price increase of approximately $40 per barrel. Sales volumes increased resulting in a decline25% increase in volumes of 4%revenue due to improved supply and 18% indemand as the second quarter and first six months of 2021 respectively, due towas impacted by planned and unplanned outages, including the effects of unusually cold temperatures and associated electrical power outages that led to shutdowns of our manufacturing facilities in Texas in early 2021.Texas.
EBITDA—EBITDA decreasedincreased by $246$270 million, or 149%182%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $84$757 million, or 79%396%, in the first six months of 20212022 compared to the first six months of 2020.2021.
Second quarter of 2022 versus first quarter of 2022—EBITDA decreased by 43% and 69% in the second quarter and first six months of 2021, respectively, due to lower margins. These margin declinesimprovements were primarily driven by unfavorable byproduct crack spreadsmargin improvements as a result of $14 per barrel and $8 per barrel in the second quarter and first six months of 2020, respectively, higher costs of Renewable Identification Numbers (“RINs”) of approximately $1 per gallon and the absence of a $50 million of favorable mark-to-market gains on hedges recognized in the second quarter of 2020. These declines in margin were partially offset by an increase in the Maya 2-1-1 market margin during the second quartermargin.
First six months of 2021 due to higher demand for refined products and the absence of unplanned outages at our fluid catalytic cracking unit in the first two quarters of 2020, which restricted the yield of higher-margin refined products. In the2022 versus first six months of 2021—Volumes increased as demand improved for refined products which resulted in a 9% increase in EBITDA. The remaining increase in EBITDA decreasedwas driven by 21%margin improvements due to lower heavy crude oil processing rates driven byan increase in the impact of facility outages as discussed above.
Maya 2-1-1 market margin.
36Other—In April 2022 we announced our decision to cease operation of our Houston Refinery no later than December 31, 2023. See Note 13 to the Consolidated Financial Statements for additional information.
Results for the first six months of 2020 included a $13 million LCM inventory valuation charge primarily driven by a decline in the price of crude oil and refined products. Results in the second quarter of 2020 included a $179 million LCM inventory valuation benefit related to the reversal of LCM inventory valuation charges recognized in the first quarter of 2020, largely driven by recovery of market prices during the quarter. The absence of similar adjustments in the first six months and second quarter of 2021 resulted in a 12% and 108% change in EBITDA, respectively.
Technology Segment
Overview—EBITDA decreasedincreased in the second quarter of 20212022 compared to the secondfirst quarter of 2020 driven2022 from higher licensing revenues, partly offset by lower licensing revenuescatalyst volumes and catalyst margins, but increased in the first six months of 2021 compared2022 relative to the first six months of 2020, primarily due to2021 driven by higher catalyst volumes and higher licensing revenues.
The following table sets forth selected financial information for the Technology segment:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Six Months Ended |
| | Three Months Ended June 30, | | Six Months Ended June 30, | | June 30, | | March 31, | | | June 30, | | June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | | 2021 | | 2020 | Millions of dollars | 2022 | | 2022 | | | 2022 | | 2021 |
Sales and other operating revenues | Sales and other operating revenues | $ | 183 | | | $ | 177 | | | $ | 348 | | | $ | 299 | | Sales and other operating revenues | $ | 194 | | | $ | 181 | | | | $ | 375 | | | $ | 348 | |
EBITDA | EBITDA | 92 | | | 112 | | | 186 | | | 168 | | EBITDA | 112 | | | 103 | | | | 215 | | | 186 | |
RevenuesRevenue—Revenues increased by $6$13 million, or 3%7%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and by $49$27 million, or 16%8%, in the first six months of 20212022 compared to the first six months of 2020. 2021.
Second quarter of 2022 versus first quarter of 2022—Licensing revenues decreased by 6% in the second quarter but increased by 5% in14% as more contracts reached significant milestones during the first six months of 2021, respectively. Higher catalyst volumes resulted in a 3% and 5% increase in the second quarter and first six months of 2021, respectively, primarily driven by a strong demand.quarter. Changes in average catalyst sales price resulted in a revenue increase of 1%3%. Lower catalyst volumes resulted in the second quartera 6% decrease in volumes due to lower demand. Unfavorable foreign exchange impacts decreased revenue by 4%.
First six months of 2021 and a revenue decrease of 2% in the2022 versus first six months of 2021. Favorable2021—Higher catalyst volumes resulted in an 8% increase in revenue primarily driven by strong demand. Changes in average catalyst sales price resulted in a 5% increase in revenue. Higher licensing revenues resulted in a 3% increase in revenue. Unfavorable foreign exchange impacts increased revenue by 5% andresulted in an 8% decrease in the second quarter and first six months of 2021, respectively.revenue.
EBITDA—EBITDA decreasedincreased by $20$9 million, or 18%9%, in the second quarter of 20212022 compared to the secondfirst quarter of 20202022 and increased by $18$29 million, or 11%16%, in the first six months of 20212022 compared to the first six months of 2020. Lower EBITDA during the second2021.
Second quarter of 2021 was equally2022 versus first quarter of 2022—EBITDA increases were primarily driven by lowerhigher licensing revenue and lowerresulting from more contracts reaching significant milestones which resulted in a 29% increase in EBITDA. This increase was partially offset by a decrease in catalyst margins. EBITDA improvementsvolume of 8% driven by a decrease in thedemand. Unfavorable foreign exchange impacts resulted in a 6% decrease in EBITDA.
First six months of 2022 versus first six months of 2021 was due to higher—Higher catalyst volumes driven by stronger demand resulted in an EBITDA increase of 13%. Higher licensing revenue. Favorablerevenues resulting from more contracts reaching significant milestones drove a 9% increase in EBITDA. Unfavorable foreign exchange impacts resulted in an EBITDA increasedecrease of 5% and 7% in the second quarter and first six months of 2021, respectively.9%.
FINANCIAL CONDITION
Operating, investing and financing activities of continuing operations, which are discussed below, are presented in the following table: | | | Six Months Ended June 30, | | Six Months Ended June 30, |
Millions of dollars | Millions of dollars | 2021 | | 2020 | Millions of dollars | 2022 | | 2021 |
Cash provided by (used in) : | | | | |
Cash provided by (used in): | | Cash provided by (used in): | | | |
Operating activities | Operating activities | $ | 2,473 | | | $ | 1,834 | | Operating activities | $ | 3,101 | | | $ | 2,473 | |
Investing activities | Investing activities | (362) | | | (1,727) | | Investing activities | (1,034) | | | (362) | |
Financing activities | Financing activities | (2,470) | | | 1,568 | | Financing activities | (2,392) | | | (2,470) | |
Operating Activities—Cash provided by operating activities of $2,4733,101 million in the first six months of 20212022 primarily reflected earnings adjusted for non-cash items payments for employee bonuses, income taxes, income from equity investments, and cash used by the main components of working capital—Accounts receivable, Inventories and Accounts payable.
In the first six months of 2022, the main components of working capital used $494 million of cash driven primarily by an increase in Accounts receivable and Inventories partially offset by an increase in Accounts payable. The increase in Accounts receivable was driven by higher revenues across most businesses primarily driven by higher average sales prices and increased demand. The increase in Inventories was primarily due to replenishment of crude and refined products inventory levels to support anticipated business demands as well as increased prices of certain inventory. The increase in Accounts payable was primarily driven by increased raw material costs.
Cash provided by operating activities of $2,473 million in the first six months of 2021 reflected earnings adjusted for non-cash items and cash used by the main components of working capital.
In the first six months of 2021, the main components of working capital used $1,561 million of cash driven primarily by an increase in Accounts receivable and Inventories partially offset by an increase in Accounts payable. The increase in Accounts receivable was driven by higher revenues across most businesses primarily driven by higher average sales prices. The increase in Inventories was primarily due to the replenishment of inventory levels to support anticipated business demands. The increase in Accounts payables was primarily driven by increased raw material costs.
Other operating activitiesInvesting Activities—Capital expenditures in 2021 includes the effectsfirst six months of changes in income tax accruals, primarily driven by the increased pretax income, partially offset by income tax payments made during the period.
Cash provided by operating activities of $1,8342022 totaled $978 million compared to $771 million in the first six months of 2020 reflected earnings adjusted for non-cash items, payments for employee bonuses, income taxes,2021. Approximately 45% and cash provided by the main components60% of working capital.
Inour capital expenditures in the first six months of 2020,2022 and 2021, respectively, was for profit-generating growth projects, primarily our PO/TBA plant, with the main components of workingremaining expenditures supporting sustaining maintenance. See Note 13 to the Consolidated Financial Statements for additional information regarding capital provided $465 million of cash drivenexpenditures by decreases in Accounts receivable and Inventory, partially offset by a decrease in Accounts payable. The decrease in Accounts receivable was primarily driven by lower sales in our Refining, APS and I&D segments due to unfavorable market conditions. The decrease in Inventory was primarily driven by company-wide inventory reduction initiatives as well as lower prices. The decrease in Accounts payable was primarily due to lower cost of sales resulting from lower production across multiple segments driven by unfavorable market conditions.segment.
Investing Activities—We invest cash in investment-grade and other high-quality instruments that provide adequate flexibility to redeploy funds as needed to meet our cash flow requirements while maximizing yield.
In the first six monthsof 20212022 and 20202021, we received proceeds of $264$8 million and $1$264 million, respectively, from the liquidation of our investmentsinvestment in equity securities. Additionally, we received proceeds of $291 million in the first six months of 2021, upon the maturitywe received proceeds of $291 million from maturities of certain available-for-sale debt securities.
In the first six months of 2021 we made an equity contribution of $104 million to form Ningbo ZRCC LyondellBasell New Material Company Limited, a 50/50 joint venture with China Petroleum & Chemical Corporation. The joint venture will constructconstructed a new propylene oxide and styrene monomer unit in Zhenhai Ningbo, China and startup is expected at the end of 2021.which began production in January 2022. The joint venture is included in our I&D segment.
Capital expenditures in the first six months of 2021 totaled $771 million compared to $1,248 million in the first six months of 2020. Approximately half of our capital spending in both periods was for profit-generating growth projects, primarily our PO/TBA plant, with the remaining spending supporting sustaining maintenance. We estimate capital spending to increase in the second half of 2021 compared to the first half of the year, while remaining flat year-over-year. See Note 12 to the Consolidated Financial Statements for additional information regarding capital spending by segment.
In the first six months of 2020 we invested $270 million in debt securities that are deemed available-for-sale. We also invested $184 million in equity securities in the first six months of 2020. Our investments in available-for-sale debt securities and equity securities are classified as Short-term investments.
Financing Activities—We made dividend payments totaling $730$2,464 million, which included a combination of a special dividend of $5.20 per share and $701an increased quarterly dividend, and $730 million in the first six months of 2022 and 2021, and 2020, respectively. Additionally, in the first six months of 2022, we made payments of $262 million to repurchase outstanding ordinary shares.
In the first six months of 2022, we received net proceeds of $105 million related to the issuance of commercial paper instruments under our commercial paper program.
In the first six months of 20212022 and 20202021, we received a return of collateral of $51$217 million and posted collateral of $238$51 million, respectively, related to the positions held with our counterparties for certain forward-starting interest rate swaps.
In the first six months of 2021, we repaid $1,450 million and $325 million outstanding under our Term Loan$4,000 million senior unsecured delayed draw term loan credit facility due March 2022 and 4% Guaranteed Notes due 2023, respectively.
In April 2020, LYB International Finance III, LLC (“LYB Finance III”), a wholly owned finance subsidiary of LyondellBasell Industries N.V. issued $500 million of 2.875% guaranteed notes due 2025 (the “2025 Notes”) at a discounted price of 99.911%, $500 million of 3.375% guaranteed notes due 2030 (the “2030 Notes”) at a discounted price of 99.813% and $1,000 million of 4.2% guaranteed notes due 2050 (the “2050 Notes”) at a discounted price of 99.373%. Net proceeds from the sale of the notes totaled $1,974 million. We used the net proceeds from the sale of the notes for general corporate purposes, including to increase our liquidity and manage short-term debt maturities.
Additionally, in April 2020 we repaid $500 million of our Senior Revolving Credit Facility and $500 million of our U.S. Receivables Facility borrowed in March 2020 to increase our liquidity.
In May 2020, we terminated and cash settled $2,000 million in notional value of our cross-currency interest rate swaps, designated as cash flows hedges, maturing in 2021 and 2024. Upon termination of the swaps, we received $346 million from our counterparties.
In the first six months of 2020, we received net proceeds of $212 million, through the issuance and repurchase of commercial paper instruments under our commercial paper program.
Additional information related to the issuance of debt and commercial paper can be found in Note 6 to the Consolidated Financial Statements.
Liquidity and Capital Resources
Overview
We plan to fund our ongoing working capital, capital expenditures, debt service, dividends and other fundingcash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof, may be used to fund the purchase of shares under our share repurchase authorization.
We intend to continue to declare and pay quarterly dividends, with the goal of increasing the dividend over time, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends while remaining committed to a strong investment grade balance sheet continues to be the foundation of our capital deploymentallocation strategy. In the near term, we are prioritizing debt reduction on our balance sheet.
Cash and Liquid Investments
As of June 30, 2021,2022, we had Cash and cash equivalents and marketable securities classified as Short-term investments totaling $1,517$1,057 million, which includes $1,062$658 million in jurisdictions outside of the U.S., principally in the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.
Credit Arrangements
At June 30, 2021,2022, we had total debt, including current maturities, of $14,173 million, and $224$11,475 million. Additionally, we had $210 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.facilities to support trade payables and other obligations.
We had total unused availability under our credit facilities of $2,910$3,841 million at June 30, 2021,2022, which included the following:
•$2,0102,941 million under our $2,500$3,250 million Senior Revolving Credit Facility, which backs our $2,500 million commercial paper program. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. A small portion of our availability under this facility is impacted by changes in the euro/U.S. dollar exchange rate. At June 30, 2021,2022, we had $500$309 million of outstanding commercial paper, net of discount, and no borrowings or letters of credit outstanding under this facility; and
•$900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At June 30, 2021,2022, we had no borrowings or letters of credit outstanding under this facility. In June 2021, we extended the term
We believe that our recent value-driven growth investments should benefit us over the coming years. With an improving outlook for cash generation, we remain committed to further strengthening our investment grade balance sheet through deleveraging. In 2021, we repaid $1,450 million and $325 million outstanding under our Term Loan due 2022 and 4% Guaranteed Notes due 2023, respectively. Our top priority for capital deployment in 2021 is debt reduction; we expect total reduction of our outstanding debt for the year to be between $3 billion and $4 billion.
At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.
In accordance with our current interest rate risk management strategy and subject to management’s evaluation of market conditions and the availability of favorable interest rates among other factors, we may from time to time enter into interest rate swap agreements to economically convert a portion of our fixed rate debt to variable rate debt or convert a portion of our variable rate debt to fixed rate debt.
Share Repurchases
In May 2022, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 27, 2023, which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased. In the first six months of 2022, we purchased approximately 2.7 million shares under our share repurchase authorizations for $256 million.
As of July 27, 2022, we had approximately 32.4 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. For additional information related to our share repurchase authorizations, see Note 11 to the Consolidated Financial Statements.
CURRENT BUSINESS OUTLOOK
We expect continued strength in demand for our products to remain strong. Three broad themes support our expectations. First, as we work to overcomefrom the challenges of virus variants, the phased rollout of vaccinespackaging markets and the progression of societal reopening around the world should support robust global demand for our products in both the manufactured goods and service industries for several quarters to come. Second, as our customers seek to address order backlogs, rebuild inventories and serve increasing consumer demand, we expect strong integrated polyethylene margins to continue. Third, increasing mobility during the second half of 2021 should drive higher demand for gasoline and jet fuel resulting in improvedfavorable margins for our oxyfuels products in the third quarter of 2022. We anticipate the Maya 2-1-1 spread to moderate from strong second quarter levels and related productswe plan to perform a limited scope of maintenance at the refinery in the coming months. Moderating demand and refining businesses.elevated costs for feedstocks and energy are likely to compress margins across most of our businesses in the third quarter. Potential benefits associated with China’s reopening could also improve results toward the end of 2022. We are carefully monitoring impacts from inflation, supply chain challenges and slowing economic conditions.
In the third quarter of 2022, we plan to begin commissioning activities associated with our world-scale U.S. Gulf Coast PO/TBA facility. We expect our new capacity will provide incremental earnings starting in 2023.
ACCOUNTING AND REPORTING CHANGES
For a discussion of the potential impact of new accounting pronouncements on our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions.
We based forward-looking statements on our current expectations, estimates and projections of our business and the industries in which we operate. We caution you that these statements are not guarantees of future performance. They involve assumptions about future events that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:
•the cost of raw materials represents a substantial portion of our operating expenses, and energy costs generally follow price trends of crude oil, natural gas liquids and/or natural gas; price volatility can significantly affect our results of operations and we may be unable to pass raw material and energy cost increases on to our customers due to the significant competition that we face, the commodity nature of our products and the time required to implement pricing changes;
•our operations in the United States (“U.S.”) have benefited from low-cost natural gas and natural gas liquids; decreased availability of these materials (for example, from their export or regulations impacting hydraulic fracturing in the U.S.) could reduce the current benefits we receive;
•if crude oil prices fall materially, or remain low relative to U.S. natural gas prices, we would see less benefit from low-cost natural gas and natural gas liquids and it could have a negative effect on our results of operations;
•industry production capacities and operating rates may lead to periods of oversupply and low profitability;
•we may face unplanned operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failures, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental incidents) at any of our facilities, which would negatively impact our operating results; for example, because the Houston refinery is our only refining operation, we would not have the ability to increase production elsewhere to mitigate the impact of any outage at that facility;
•changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate could increase our costs, restrict our operations and reduce our operating results;
•our ability to execute our organic growth plans may be negatively affected by our ability to complete projects on time and on budget;
•our ability to acquire new businesses and assets and integrate those operations into our existing operations and make cost-saving changes in operations;
•uncertainties associated with worldwide economies could create reductions in demand and pricing, as well as increased counterparty risks, which could reduce liquidity or cause financial losses resulting from counterparty default;
•uncertainties related to the extent and duration of the pandemic-related decline in demand, or other impacts due to the pandemic in geographic regions or markets served by us, or where our operations are located, including the risk of prolonged recession;
•the negative outcome of any legal, tax and environmental proceedings or changes in laws or regulations regarding legal, tax and environmental matters may increase our costs, reduce demand for our products, or otherwise limit our ability to achieve savings under current regulations;
•any loss or non-renewal of favorable tax treatment under agreements or treaties, or changes in laws, regulations or treaties, may substantially increase our tax liabilities;
•we may be required to reduce production or idle certain facilities because of the cyclical and volatile nature of the supply-demand balance in the chemical and refining industries, which would negatively affect our operating results;
•we rely on continuing technological innovation, and an inability to protect our technology, or others’ technological developments could negatively impact our competitive position;
•we may be unable to meet our sustainability goals, including the ability to operate safely, increase production of recycled and renewable-based polymers, and reduce our emissions intensity;emissions;
•we may be unable to shut down the Houston refinery within the expected timeframe or incur additional charges or expenses;
•we have significant international operations, and fluctuations in exchange rates, valuations of currencies and our possible inability to access cash from operations in certain jurisdictions on a tax-efficient basis, if at all, could negatively affect our liquidity and our results of operations;
•we are subject to the risks of doing business at a global level, including wars, terrorist activities, political and economic instability and disruptions and changes in governmental policies, which could cause increased expenses, decreased demand or prices for our products and/or disruptions in operations, all of which could reduce our operating results;
•if we are unable to comply with the terms of our credit facilities, indebtedness and other financing arrangements, those obligations could be accelerated, which we may not be able to repay; and
•we may be unable to incur additional indebtedness or obtain financing on terms that we deem acceptable, including for refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses.
Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. Our management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.
All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and any other cautionary statements that may accompany such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market and regulatory risks is described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020.2021. Our exposure to such risks has not changed materially in the six months ended June 30, 2021.2022.
Item 4. CONTROLS AND PROCEDURES
As of June 30, 2021,2022, with the participation of our management, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer) carried out an evaluation, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the Act)“Act”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2021.2022.
There have been no changes in our internal controls over financial reporting, as defined in Rule 13a-15(f) of the Act, in the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information regarding our litigation and legal proceedings can be found in Note 910 to the Consolidated Financial Statements, which is incorporated into this Item 1 by reference.
In September 2013, U.S. Environmental Protection Agency (“EPA”) Region V issued a Notice and Finding of Violation alleging violations at our Morris, Illinois facility related to flaring activity. The Notice generally alleges failures to monitor steam usage and improper flare operations. In the Fall of 2020, EPA referred the matter to the U.S. Department of Justice and EPA Headquarters for civil judicial enforcement. In July 2022, a court notice was filed regarding a final settlement agreement providing for a civil penalty of $324,000 and the installation of monitoring and control equipment. Following a public comment period, we expect entry of the settlement by the court.
In April 2022, the State of Texas filed suit against Equistar Chemicals, LP, in Travis County District Court seeking civil penalties and injunctive relief for alleged violations of the Texas Clean Air Act related to multiple emissions events at Equistar’s Bayport Plant. We reasonably believe resolution of this matter will result in payment of a penalty in excess of $300,000.
Additional information about our environmental proceedings can be found in Part I, Item 3 of our 20202021 Annual Report on Form 10-K, which is incorporated into this Item 1 by reference.
Item 1A. RISK FACTORS
There have been no material changes to the risk factors associated with our business previously disclosed in “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2020.2021.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuer Purchases of Equity Securities |
| | | | | | | | |
Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Authorizations | | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Authorizations |
April 1 - April 30 | | 38,160 | | | $ | 99.34 | | | 38,160 | | | 26,729,691 | |
May 1 - May 31 | | — | | | $ | — | | | — | | | 34,026,947 | |
June 1 - June 30 | | 560,396 | | | $ | 89.24 | | | 560,396 | | | 33,466,551 | |
Total | | 598,556 | | | $ | 89.88 | | | 598,556 | | | 33,466,551 | |
On May 27, 2022, our shareholders approved a share repurchase authorization of up to 34,026,947 shares of our ordinary shares, through November 27, 2023, which superseded any prior repurchase authorizations. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 6. EXHIBITS
| | | | | | | | |
Exhibit Number | | Description |
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10.1+10.1 | | |
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10.2 | | Fourth Amendment to Receivables Purchase Agreement, dated as of June 30, 2021, among Lyondell Chemical Company, as servicer, LYB Receivables LLC, as seller, the conduit purchasers, related committed purchasers, LC participants and purchaser agents party thereto, the other parties thereto and Mizuho Bank, Ltd., as Administrator and LC Bank (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 2, 2021)31, 2022). |
| | |
31.1* | | |
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31.2* | | |
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32* | | |
| | |
101.INS* | | XBRL Instance Document–The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH* | | XBRL Schema Document |
| | |
101.CAL* | | XBRL Calculation Linkbase Document |
| | |
101.DEF* | | XBRL Definition Linkbase Document |
| | |
101.LAB* | | XBRL Labels Linkbase Document |
| | |
101.PRE* | | XBRL Presentation Linkbase Document |
| | |
104* | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| | |
+ Management contract or compensatory plan, contract or arrangement
* Filed herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| | LYONDELLBASELL INDUSTRIES N.V. |
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Date: | July 30, 202129, 2022 | /s/ Michael C McMurrayChukwuemeka A. Oyolu |
| | Michael C. McMurrayChukwuemeka A. Oyolu |
| | ExecutiveSenior Vice President, and |
| | Chief FinancialAccounting Officer and Investor Relations |
| | (Principal Financial and Accounting Officer) |