# Message from the CEO

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_LYB_2020/NYSE_LYB_2020.mmd` · pages 1-7_

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Message from the CEO

To the owners of our company,

Without a doubt, the past year has been one of the most challenging periods in recent memory: a global pandemic; a dramatic decline in oil prices; a rapidly accelerating energy transition; civil unrest around the world; and a weakened global economy that continues to impact millions of individuals and families. As I write, the seasons have changed and the calendar has turned, yet many of the challenges that began in 2020 remain in front of us in 2021.

Early in 2020, as the virus became more widespread, our leadership team established three principles to guide our company's actions in the short term. These were to:

I Protect our employees, both from the virus in the workplace and also from widespread layoffs;

I Prioritize cash flow and keep our commitments to our shareholders; and,

I Take action to strengthen the company for the future.

As I look back on 2020, I'm extraordinarily grateful for how our team embraced this approach, demonstrated resilience, and ultimately, delivered results. Today, as vaccines begin to roll out and we continue to combat the virus, our team's resolve and focus on results has not diminished.

While 2020 was remarkable in so many ways, the benefits of our strong safety culture were particularly evident during this period. In the early days of the pandemic, we moved quickly to implement a comprehensive global approach to help prevent the spread of the virus in the workplace. I'm proud to say across 2020, we experienced zero cases of workplace transmission. While the challenges of 2020 had the potential to create distraction in other areas of safety performance, I'm also proud to say our team also reduced in our workplace injury rate, further improving upon our already industry-leading performance in this area.

## Delivering for our shareholders

To ensure our competitiveness in a range of market environments, for the past decade our team has prioritized a lean cost structure, maintaining leading product positions, feedstock flexibility, excellent operational performance and a disciplined approach to capital allocation. If 2020 proved anything, it's that this strategy continues to serve us well allowing us to deliver on our three priorities.

In addition to leveraging these historical strengths, we have been further expanding our core competencies to include M&A execution and a focus on extracting value from integration activities. Altogether, our asset base, existing operational models and expanded skillsets position us well to benefit from an economic recovery.

Like our industry peers, in 2020 we were not immune to the challenges of the macro-environment. Yet, because of our very deliberate approach, we were able to deliver \(1.4 billion of net income, \)3.9 billion of EBITDA excluding LCM and impairment \( ^{1} \) , $5.61 diluted earnings per share excluding LCM and impairment \( ^{1} \)  and $3.4 billion of cash from operating activities. Through the year, we took action to reduce capital expenditures, aggressively manage working capital and further enhance liquidity by accessing the debt capital markets. In addition, we were able to fund our 2020 dividend from operating cash flow.

## Maintaining focus on the longer term

As we responded to the situation at hand, we also remained focused on our strategy to build value for the longer-term.

During the past several years, we have thoughtfully planted the seeds for profit-generating growth that should meaningfully enhance EBITDA and cash flow while creating a structural advantage for the future. These include:

I Exceeding synergy targets in our Advanced Polymer Solutions segment: At our investor day in September 2019, we increased our target for run rate synergies from the A. Schulman acquisition from \(150 million to \)200 million per year.

I Harvesting new sources of cash flow from organic growth: In the first quarter of 2020, we began operations at our 500 thousand ton per year Hyperzone HDPE plant in Houston, Texas.

In addition, we continue to make progress on our PO/TBA plant currently under construction in Houston, Texas. To help prevent the spread of the virus at the construction site and conserve capital, we slowed this project in the first part of the year, but were able to return to full pace in the fall. We continue to anticipate start-up in the fall of 2022.

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I Strategic expansion in growing markets: In China, we formed a 50/50 joint venture with the Liaoning Bora Enterprise Group which recorded a positive contribution to earnings in its first month of operation. In addition, we are expanding our existing relationship with Sinopec through the formation of a 50/50 joint venture, which will build a new propylene oxide (PO) and styrene monomer (SM) unit. Both joint ventures will serve the rapidly growing Chinese market.

I Finding opportunities during industry cycles: In the fourth quarter, we completed a new 50/50 joint venture with Sasol which includes a newly-constructed ethylene cracker, two polyethylene units and the associated utilities and infrastructure located in Lake Charles, Louisiana. This investment represents a unique opportunity to create deep, long-term value while immediately realizing the many benefits of new, strategically-located, world-scale asset in a feedstock-advantaged region.

Together, the Bora and Sasol JVs represent the full capacity and immediate financial benefits of a new and operational world-scale integrated cracker complex with minimal exposure to the project completion risks that are typically associated with the multi-year construction of these facilities.

## A commitment to sustainability

We also made meaningful progress in the area of sustainability over the course of the year. In September, we announced comprehensive goals that focus on action in the areas of plastic waste, climate change and supporting a thriving society. As we consider the decade ahead, we have committed to a number of actions including:

I Setting one of the most ambitious targets for recycled and renewable-based polymers: To help address the issue of plastic waste in the environment, our goal is to produce and market two million metric tons of recycled and renewable-based polymers annually by 2030.

I Expanding mechanical recycling capacity: To help meet our ambitious goal for recycled plastics, we announced the expansion of our Quality Circular Polymers (QCP) joint venture in Europe with our partner SUEZ. Through the acquisition of a Belgium-based plastics recycler, QCP's processing capacity is increasing from approximately 35,000 tons of material to approximately 55,000 tons of material per year.

I Advancing next-generation recycling technologies: In September, we started up our MoReTec molecular recycling pilot plant in Ferrara, Italy to advance work in this regard. Our goal is to return mixed post-consumer plastic waste into feedstocks for new polymers.

I Reducing our carbon footprint: We recognize the challenge of climate change. We set a target to reduce our 2030 CO \( _{2} \)  emissions by 15 percent per ton of product, relative to 2015 levels.

## Enhancing diversity, equity and inclusion

Over the course of the year, we saw people around the world express their desire for a more just, fair and equitable society. While our diversity and inclusion efforts were already underway, the volume and passion of these voices motivated us to accelerate our progress.

To this end, we named our company's first Diversity and Inclusion Officer, established a company-wide diversity council and are focused on meaningful action in the areas of company policy, recruiting, workforce planning, and leadership development.

## Well positioned for the future

Today, with vaccines being distributed and economic conditions improving, I can say that I am very optimistic about the future. As a result of our diverse global business portfolio, proven operating model and disciplined financial strategy, our company demonstrated extraordinary resiliency throughout 2020's extremely challenging conditions.

Looking forward, we are confident that the projects we have completed, those that are underway and the strategic partnerships we have formed will increase cash flow and further strengthen our platform for the future. These new sources of earnings, continued disciplined investment and focus on cash flow will further strengthen LyondellBasell's ability to capture significant upside in an improving economy.

All of these accomplishments would not be possible without our incredibly committed team around the world.

I hope you are as proud of all that our company has been able to accomplish as I am.

Sincerely,

![](images/2_0.jpg)

Bhavesh V. (Bob) Patel
Chief Executive Officer