# Dear shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_LYB_2022/NYSE_LYB_2022.mmd` · pages 1-7_

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Dear shareholders:

It is a privilege to address you for the first time as CEO of LyondellBasell. Since joining the company last May, nothing has impressed me more than our people's resilience, determination and character. Coupled with a relentless focus on safety and delivering excellence, their resolve and adaptability helped us stand above the challenges arising from a highly dynamic year. This included positioning the company to succeed long-term in circular and low carbon solutions.

During 2022, we gained momentum in our journey to become an innovative industry-shaper with investments and collaborations in several strategic areas. Those included expansions in core businesses with attractive fundamentals such as our propylene oxide tertiary butyl alcohol (PO/TBA) project. Further, we collaborated with global brands to expand our sustainable solutions with certified recycled and renewable content, and we continued to advance our licensing activities for polyolefin processes and catalysts.

Coupled with the strengths of our products, materials and technologies, we are advancing sustainable solutions for food safety, access to clean water, healthcare and fuel efficiency in more than 100 international markets. This gives me confidence LyondellBasell has the right ingredients to become a true market leader and succeed long term.

# "We are entering an exciting chapter in our company's evolution, with confidence in our ability to create lasting, sustainable value."

– Peter Vanacker, Chief Executive Officer

When I look at the future of the enterprise, the need to address shifting market realities and societal changes around climate and circularity has never been greater, and we see opportunities to capture value from our near-term actions. With this in mind, we have accelerated our journey to ensure LyondellBasell stands above the challenges and returns value to our shareholders while doing so.

Looking forward, we are focusing on value creation while continuing to maintain disciplined cost management. This shift will drive future success, improve customer relationships and unlock accretive opportunities.

We are entering an exciting chapter in our company's evolution, with confidence in our ability to create lasting, sustainable value. Here are last year's highlights:

## Primed for value generation

During 2022, LyondellBasell's balanced business portfolio, excellent cash generation and strong, investment-grade balance sheet enabled the company to successfully navigate through challenging market conditions while continuing to provide significant returns for our shareholders.

Over the full year, petrochemical markets faced pressures from high and volatile energy and feedstock costs as well as softer global demand. The company's Olefins & Polyolefins – Americas and Olefins & Polyolefins – Europe, Asia & International segments encountered headwinds from reduced demand in Europe and Asia as well as global capacity additions. Our Intermediates & Derivatives segment benefited from improved oxyfuels margins which were partially offset by lower margins for other products due to lower demand. Our Refining segment margins benefited from increased mobility and favorable markets.

In response to the macro conditions, we reduced operating rates to match lower demand and to manage our working capital. In addition, we continued to optimize our portfolio, as evidenced by our sale of the polypropylene business in Australia and the previously announced exit from the refining business.

Through it all, we generated more than \(6 billion of cash from operations, delivered a 16% return on invested capital and returned \)3.7 billion to shareholders in dividends and share repurchases.

We did this with an unequivocal focus on safety and capital discipline. We reached a record low 0.12 injury rate per 200,000 work hours – almost half of the rate in 2021.

During 2022, the company earned net income of \(3.9 billion, or \)4.1 billion excluding identified items. This yielded diluted earnings per share (EPS) of \(11.81, or \)12.46 diluted EPS excluding identified items. Earnings before interest, taxes, depreciation and amortization (EBITDA) was \(6.3 billion, or \)6.5 billion excluding identified items.

## Sustainable core businesses

Our multipronged approach to deliver sustainable and attractive shareholder returns encompasses several core products, many of which make everyday living possible.

They help our customers create high performing products, including packaging to prevent food waste, insulation materials to improve energy efficiency and parts, and paints and coatings to ensure vehicles are lightweight. Our products are used worldwide and demand for them continues to grow as the global population increases.

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Another notable example of harnessing our existing businesses to introduce accretive and sustainable solutions is our PO/TBA project. This investment is on track to start up by the end of the first quarter of 2023. Our patented PO/TBA technology offers the most cost-effective production technology to meet demand for construction and insulation materials that make buildings more energy efficient.

## Early movers in circular, low carbon solutions

As we continue to focus on the future beyond today's core businesses, we took action to establish a Circular and Low Carbon Solutions (CLCS) business to deliver on our ambition to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030. Since 2019, we have sold more than 175,000 tons of these polymers.

CLCS-led initiatives have taken early steps to expand our global footprint for plastics recycling, with strategic collaborations announced in China, Germany and India.

We also entered the engineering phase on an advanced recycling plant with our proprietary MoReTec technology at our site in Wesseling, Germany. Subject to final investment decision in 2023, this would be our first commercial-scale, advanced recycling asset, which is expected to start up by the end of 2025.

## Customer-centric innovations

Our value chain collaborations on circularity are ushering in tomorrow's sustainable solutions today. In 2022, we worked alongside several top businesses to introduce solutions from our Circulen portfolio of polymers derived from mechanical recycling (CirculenRecover), renewable-based feedstocks (CirculenRenew) and advanced recycling (CirculenRevive). Recent collaborations include working with Röchling Medical to create eye drop containers using CirculenRenew polymers and helping restaurant chain Wendy's with their plans to move from lined paper cups to clear plastic cups made from CirculenRevive polymers.

## Leading industry greenhouse gas (GHG) emissions reduction goals

In December 2022, we accelerated steps toward a low carbon future and announced bold plans to align our GHG emissions reduction goals with science-based guidance, as part of our overall journey to reach net zero GHG emissions by 2050. With 2020 as a baseline, we will reduce our absolute Scope 1 and 2 GHG emissions from our operations by 42% by 2030. We will also reduce Scope 3 emissions by 30% within the same timeframe. While our actions address the global challenge of climate change, they will also return value driven by customer demand for materials with lower carbon footprints, improved energy consumption and help us address legislative moves that favor GHG emissions reduction.

## Enterprise evolution unlocked

Our work in 2022 strengthened our foundation, enabling us to adapt and successfully navigate uncertain business cycles.

We implemented a new organizational structure, aimed at fostering accountability, operational excellence, business agility and empowering teams. This marks a step change in our organization to enhance speed and effectiveness in decision-making.

With a redesigned structure, I am proud of the significant progress we have made in our journey to have a more diverse leadership team, now with 40% of my direct reports being female. Of the 10 members on our Executive Committee, four are women, and together we represent six different nationalities. These changes will inject the kind of insightful perspectives and experiences we need to stand above an increasingly more complex market environment.

Last year, our organizational shifts helped enable us to deliver value with the launch of a value enhancement program targeting $750 million in recurring annual EBITDA by the end of 2025. Combined with our new organizational structure, and work underway to evolve our strategy, it will strengthen our company's purpose, commitments and values. I look forward to sharing more about this in 2023.

In April 2023, our new sustainability report will also be published, and I invite you to read it to learn more about our progress in advancing sustainable solutions.

In closing, the executive committee and I have never been more excited about the future of LyondellBasell. We made bold, decisive moves to strengthen our leadership position. It is a true honor to lead this incredible company.

Best wishes,

![](images/2_0.jpg)

Peter Vanacker
Chief Executive Officer