# Message from the CEO

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_LYB_2019/NYSE_LYB_2019.mmd` · pages 3-9_

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Message from the CEO

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Bhavesh V. (Bob) Patel
Chief Executive Officer

we find ourselves
well positioned to
succeed in a range
of market conditions by
maximizing cash flow and
continuing our tradition of
delivering for shareholders."
To the owners of our company,

We find ourselves in the midst of an extraordinary, unprecedented period in history. Global events, the coronavirus and a low oil price have challenged nearly every company to rethink assumptions and adapt strategies to a new and very different operating environment. In response to the pandemic, LyondellBasell activated its global response plan. Because there is no higher priority than the health and safety of our employees, this plan prioritized actions to minimize the spread of the virus while maintaining business continuity.

Like the rest of the petrochemical industry, in 2019 LyondellBasell experienced more challenging market conditions. Despite these headwinds, through our operating model, which prioritizes cost management, maintaining leading product positions, feedstock flexibility, operational agility and disciplined capital allocation, and, our dedicated team of 19,100 employees around the globe, LyondellBasell delivered \(5.7 billion of EBITDA, \)9.58 diluted earnings per share and $5 billion of cash from operating activities.

In May, we increased our quarterly dividend to \(1.05 per share, the 11th dividend increase since 2011. This increase places LyondellBasell's dividend yield in the top quartile of the S&P 500. In addition, we repurchased 43 million shares for a total of \)3.8 billion. Together with dividends, we returned a total of $5.2 billion to shareholders in 2019.

Today, with a strong balance sheet and a balanced, resilient portfolio we find ourselves well positioned to succeed in a range of market conditions by maximizing cash flow and continuing our tradition of delivering for shareholders.

As we look to the future, we have a clear strategy and priorities.

## Well positioned for a range of market environments

First and foremost, we remain focused on delivering top quartile safety performance. This was evidenced in 2019 as we integrated the employees, contractors and assets from A. Schulman. Among this population we were able to reduce the injury rate at these facilities by more than 50 percent relative to the prior year. Additionally, in the United States, our manufacturing facilities achieved the lowest injury rate in our history. Our goal remains zero injuries and we will continue to work diligently to ensure everyone at our facilities finishes the day in the same condition as they started.

We also remain committed to the projects and initiatives that will position the company for the future. The commissioning of our state-of-the-art Hyperzone PE plant near Houston, Texas began in the fourth quarter, and progress on the world's largest next generation technology propylene oxide (PO) and tertiary butyl alcohol (TBA) plant continued. Today, the Hyperzone PE plant is producing product and we are moving toward demonstration of a full grade slate later this year.

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During our investor day in September, we provided an update on the integration efforts underway in our Advanced Polymer Solutions segment. The acquisition of A. Schulman, which closed in August of 2018, is on track to create significant value. In 2019, our team continued to make progress on the integration efforts, and we have been able to increase our forward annual run-rate synergy target from $150 million to $200 million.

While the global economy experienced a slowdown in the early part of 2020, all indicators suggest that the Chinese economy will continue to grow at a greater rate than global GDP over the longer-term. To further position the company in this market, at the end of 2019, we signed two significant memoranda of understanding (MoU) for the development of 50/50 joint ventures that will use LyondellBasell's industry-leading technology to serve the growing Chinese market with local production.

The first MoU, with the Liaoning Bora Enterprise Group, is for a 1.1 million ton ethylene cracker to produce olefins and polyolefins for construction and consumer products, including pipe, durable plastic containers and agricultural films. The cracker, set for start-up in the second half of 2020, will employ our Hostalen ACP polyethylene and both Spheripol and Spherizone polypropylene technologies.

The second MoU further builds upon an existing joint venture with Sinopec. The joint venture, which will use our Spherizone and Hostalen ACP technologies, will construct a new propylene oxide and styrene monomer unit in Zhenhai, Ningbo, China. Construction of the facility is expected to begin in early 2020 with start-up anticipated in 2022.

## Value-driven sustainability and focused innovation

We recognize that our industry is facing a period of disruption posed by the challenge of plastic waste in the environment. During 2019, our company advanced a proactive, multi-prong approach that seeks to address the challenge and create value for our shareholders. In our view, sustainability cannot be about generating good public relations; it must be substantive and lead to economic models that allow us to deliver value and reinvest.

To this end, we have been moving in parallel on several fronts, including:

Mechanical recycling: In 2019, our industry-leading mechanical recycling partnership in the Netherlands with SUEZ, called Quality Circular Polymers (QCP), produced materials that were used in consumer applications. Examples include packaging for Unilever's Dove and Axe personal care products, Samsonite's S'Cure ECO suitcase, and Mauser Packaging Solutions' medical waste containers.

1 Molecular recycling technology: Through our partnership with Germany's Karlsruhe Institute of Technology we are developing a recycling process for converting plastic waste into feedstock. In October, we announced that we are building a pilot plant to test this technology on a larger scale at our Ferrara, Italy site.
1 Bio-based feedstocks: In June, we introduced grades of bio-based polypropylene and low-density polyethylene under the Circulen brand name. Circulen materials are made from bio-based waste materials such as vegetable oil and offer the same high quality properties as virgin plastics in terms of mechanical and product performance as well as regulatory approvals.

1 The Alliance to End Plastic Waste: I am very proud to serve as the vice chairman of the Alliance to End Plastic Waste. Launched in January 2019, the Alliance is already making significant progress. Because 10 rivers in Asia and Africa transport more than 90 percent of the waste to the ocean, we are focused in areas where we can have the greatest impact. During the year, the Alliance announced several on-the-ground waste cleanup efforts, including a project to remove plastic waste from the Ganges River in India; a partnership with Project STOP in Bali designed to support the development and launch of a waste management recycling system; and a partnership with Pług and Play, a global innovation accelerator that will run an initiative focused on identifying and bringing startups together as they seek to lower the impact of plastic waste in the environment.

Taken together, these accomplishments tell the story of a company leading our industry, with advanced technology and assets, while maintaining a disciplined approach to investment and value creation. With several growth projects well underway or nearing completion, LyondellBasell is positioned to increase free cash flow, creating even more value for our shareholders in the coming years.

As we close the chapter on 2019 and navigate an unprecedented social and business environment in 2020 resulting from the COVID-19 pandemic, I remain convinced that the companies who effectively navigate the most challenging of times are those focused on fundamentals, disciplined about capitalizing on opportunities that arise, and do so with integrity and humility. I believe the economic uncertainties associated with COVID-19 will be formidable, but I am very confident that our team of 19,100 employees is well-suited to meet those challenges.

Because of the work that has taken place over the past 10 years, I continue to believe that our company is well-positioned, despite a more challenging business climate in the coming year.

Thank you for your continued confidence in us.

Most sincerely,

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Bhavesh V. (Bob) Patel
Chief Executive Officer