Executive Summary
Rating: HOLD | LYB
LyondellBasell Industries N.V. is a cyclical chemical producer with a defensible feedstock and technology platform, but the investment case is still anchored in margin normalization rather than structural growth. The shares screen at 14.6x EV/EBITDA and 8.7x forward P/E, while TTM operating margin is 3.5% and net margin is -2.7%, underscoring a business that is generating cash but not yet earning a clean return through the cycle. The key support is the company’s U.S. feedstock-flexible cracker system and technology licensing base; the main risk is persistent oversupply in commodity chemicals. Near-term upside depends on whether the Q1 2026 EBITDA recovery to $617M proves durable.
Investment Rating
Rating: HOLD
Valuation is reasonable at 14.6x EV/EBITDA and 8.7x forward P/E, but not cheap enough for a cyclical business with TTM operating margin of 3.5% and ROE of -6.01%. The key risk is chemical oversupply and margin compression. Total debt is $14,360M, while TTM operating cash flow is $2,572M, which supports the balance sheet but limits upside.
Company Profile
LyondellBasell is a global chemical company that converts hydrocarbon feedstocks into olefins, polyethylene, polypropylene, propylene oxide, oxyfuels, and specialty polymers, and also licenses process technology and sells catalysts. Revenue is generated mainly from commodity product sales, with 2025 mix led by polyethylene at 24.0%, polypropylene at 19.0%, oxyfuels and related products at 16.0%, and olefins and co-products at 14.0%. It was incorporated under Dutch law on October 15, 2009, after the 2010 formation of the current group from Lyondell Chemical and Basell. In February 2025, it shut the Houston refinery and classified refining as discontinued operations. It operates 19.0 major manufacturing sites across the U.S., Europe, and Asia, including Channelview, La Porte, Wesseling, and Botlek, plus research centers in five countries. The company is financed with a $3,750 million revolving credit facility and a $900 million receivables facility, and its listed equity class is ordinary shares on the NYSE under LYB.
Economic Moat
Business Model
The company’s advantage comes from scale, feedstock flexibility, and embedded technology relationships rather than from product differentiation. Its Americas cracker system can process either heavy liquids or NGLs, allowing it to shift between shale-based ethane and heavier liquids as relative economics change. That flexibility is difficult to replicate quickly because it requires integrated cracking, logistics, and downstream conversion capacity. The Technology segment adds a second layer of stickiness through process licenses and catalyst supply agreements, while the company’s 5,000.0 patents and patent applications worldwide reinforce its technical position.
Risk Factors
Cyclicality and oversupply in chemicals is the highest-severity risk. The company notes that the industry moves through alternating periods of capacity shortages and excess capacity, and that new capacity additions have already pressured utilization and margins. A sustained crude oil decline also hurts North America because energy costs generally follow crude oil and natural gas trends, while the company may not be able to pass through raw material and energy inflation quickly enough.
Feedstock, utility, and water disruption is a high-severity risk because several facilities rely on a sole dedicated source for steam, electricity, or gas, and the company warns that closure of such a supplier could prevent profitable operation of affected assets. Gulf Coast water scarcity, drought, and marine transport interruptions add further operational fragility.
Capital project execution is medium severity. The company has deferred Flex-2 in Channelview and postponed the final investment decision on MoReTec-2, and delays, tariffs, labor shortages, or permit denials could reduce project returns.
Climate, plastics, and litigation risk is high severity. EU ETS free allowances are expected to decline, a Kansas class action was filed in 2024, and the company warns of significant fines, damages, and possible injunctive relief.
Management Discussion & Analysis
Management is signaling a more conservative capital allocation posture. 2026 capex is set at $1.2B, with $800.0M, or 66.7%, directed to sustaining maintenance and $400.0M to growth, while Flex-2 at Channelview is being delayed and MoReTec-1 remains in progress. That mix suggests preservation of cash through the cycle rather than aggressive capacity expansion.
The February 2026 dividend cut to 0.7 per share from 1.4 in Q4 2025 indicates management is prioritizing balance-sheet flexibility over payout stability. The company also returned $2.0B to shareholders in 2025 versus $1.9B of capex, so the capital-allocation message is not purely defensive; it is a rebalancing toward maintenance, selective growth, and liquidity.
Recent Earnings
The most recent quarter showed a cleaner earnings profile than the prior trough period. Q1 2026 revenue was $7,197.0M, up from $7,091.0M in Q4 2025, while EBIT improved to $275.0M from $-10.0M and EBITDA rose to $617.0M from $375.0M. Net income also returned to positive territory at $123.0M.
The key takeaway is that the business is still highly sensitive to spread conditions, but the latest quarter suggests some operating leverage as volumes and pricing stabilized. The Q4 2025 swing in EBITDA has no clear driver identified; investors should seek further disclosure.
Financial Analysis
Growth
LYB — Financial Growth (Quarterly, USD Mil)
Source: Yahoo Finance — Quarterly Financial Statements
| Metric | 2025-03-31 | 2025-06-30 | 2025-09-30 | 2025-12-31 | 2026-03-31 |
|---|---|---|---|---|---|
| REVENUE (USD Mil) | 7,677.000 | 7,658.000 | 7,727.000 | 7,091.000 | 7,197.000 |
| EBIT (USD Mil) | 166.000 | 342.000 | -726.000 | -10.000 | 275.000 |
| EBITDA (USD Mil) | 489.000 | 674.000 | -376.000 | 375.000 | 617.000 |
| NET INCOME (USD Mil) | 175.000 | 114.000 | -892.000 | -142.000 | 123.000 |
| DILUTED EPS | 0.540 | — | -2.770 | — | 0.380 |
Revenue was broadly stable through 2025 before recovering modestly in Q1 2026. The company reported $7,677.0M in Q1 2025, $7,658.0M in Q2 2025, $7,727.0M in Q3 2025, $7,091.0M in Q4 2025, and $7,197.0M in Q1 2026. The main point is not top-line expansion but resilience: the business held near a $7.7B quarterly run-rate before a year-end dip and then partially recovered.
EBIT and EBITDA were more volatile than revenue, which is typical for a commodity chemical portfolio. EBIT moved from $166.0M in Q1 2025 to $342.0M in Q2 2025, then fell to $-726.0M in Q3 2025 before recovering to $275.0M in Q1 2026. That pattern shows margin sensitivity to spreads and utilization rather than demand collapse.
Profitability
LYB — Profitability (TTM)
Source: Yahoo Finance — Trailing Twelve Months (TTM)
| Metric | TTM |
|---|---|
| Operating Margin (TTM) | 3.5% |
| Net Margin (TTM) | -2.7% |
| Return on Assets (TTM) | 1.7% |
| Return on Equity (TTM) | -6.0% |
TTM operating margin was 3.5%, net margin was -2.7%, ROA was 1.7%, and ROE was -6.0%. The profile indicates modest operating profitability but still negative bottom-line returns after financing and other below-the-line items. The key issue is not revenue scale; it is that the company is not yet converting its asset base into consistent equity returns.
Valuation
LYB — Valuation Multiples
Source: Yahoo Finance
| Metric | Value |
|---|---|
| Market Cap (USD Mil) | 21,022.972 |
| Enterprise Value (USD Mil) | 32,364.024 |
| Trailing P/E | — |
| Forward P/E | 8.652 |
| Price/Sales (TTM) | 0.708 |
| Price/Book (mrq) | 2.094 |
| EV/Revenue | 1.091 |
| EV/EBITDA | 14.572 |
| Beta (5Y Monthly) | 0.328 |
LYB trades at 1.1x EV/Revenue and 0.7x Price/Sales, with 14.6x EV/EBITDA and 8.7x forward P/E. Trailing P/E is not available because the TTM earnings base is negative. Price/Book is 2.1x and beta is 0.3, which is consistent with a lower-volatility cyclical name rather than a high-growth compounder.
The valuation implies the market is paying for normalized earnings power, not for growth. On current numbers, the stock is neither distressed nor expensive, but it does require confidence that EBITDA can hold above the recent trough.
Leverage
LYB — Leverage & Coverage (Quarterly)
Source: Yahoo Finance — Quarterly Financial Statements
| Metric | Value |
|---|---|
| Total Debt/Equity % (mrq) | 141.240 |
| Current Ratio (mrq) | 1.538 |
| Total Debt (mrq, USD Mil) | 14,357.000 |
| Operating Cash Flow (TTM, USD Mil) | 2,572.000 |
| Levered Free Cash Flow (TTM, USD Mil) | 987.000 |
Total debt was $14,360.0M mrq, with total debt/equity at 141.2% and a current ratio of 1.5x. Operating cash flow was $2,572.0M TTM and levered free cash flow was $987.0M TTM. That cash generation supports liquidity, but leverage remains elevated, so refinancing flexibility is adequate rather than ample.
Comparable Analysis
LYB’s revenue TTM of 29,673.0M is below DOW’s 39,331.0M and above DD’s 6,918.0M, WLK’s 10,976.0M, CE’s 9,492.0M, and HUN’s 5,693.0M. Revenue growth was -6.3% YoY, broadly in line with DOW at -6.1%, WLK at -6.8%, and CE at -2.2%, while DD was the only peer with positive growth at 4.3%.
On profitability, LYB’s operating margin of 3.5% sits above DOW at 0.0%, WLK at -5.8%, and HUN at -0.4%, but below DD at 13.8% and CE at 8.5%. ROE of -6.0% is less weak than CE at -21.1% and WLK at -16.0%, but still negative.
On leverage, LYB’s debt/equity of 141.2% is above DOW at 117.1%, DD at 22.6%, WLK at 70.5%, and HUN at 85.7%, but below CE at 287.7%. Liquidity is also reasonable at a 1.5x current ratio, versus DOW at 1.8x, DD at 2.7x, WLK at 2.2x, CE at 1.4x, and HUN at 1.3x.
Valuation is mixed. LYB’s 1.1x EV/Revenue and 14.6x EV/EBITDA are below DD’s 3.2x and 14.2x, below WLK’s 1.4x and 21.9x, and above CE’s 1.8x and 10.9x on EV/Revenue and EV/EBITDA, respectively. The stock is not the cheapest peer, but it also does not carry the richest multiple.
Growth
| Company | Revenue TTM (USD Mil) | Revenue Growth YoY % | EBITDA TTM (USD Mil) | Diluted EPS TTM |
|---|---|---|---|---|
| LYB | 29,673.000 | -6.3% | 2,221.000 | -2.120 |
| DOW | 39,331.000 | -6.1% | 2,642.000 | -4.000 |
| DD | 6,918.000 | 4.3% | 1,553.000 | 0.380 |
| WLK | 10,976.000 | -6.8% | 706.000 | -12.700 |
| CE | 9,492.000 | -2.2% | 1,575.000 | -9.860 |
| HUN | 5,693.000 | 0.7% | 254.000 | -1.880 |
Valuation
| Company | Trailing P/E | Forward P/E | EV/Revenue | EV/EBITDA | Price/Sales (TTM) | Price/Book (mrq) | Market Cap (USD Mil) | Enterprise Value (USD Mil) | Beta (5Y Monthly) |
|---|---|---|---|---|---|---|---|---|---|
| LYB | — | 8.652 | 1.091 | 14.572 | 0.708 | 2.094 | 21,022.970 | 32,364.020 | 0.328 |
| DOW | — | 15.685 | 1.036 | 15.428 | 0.626 | 1.616 | 24,634.940 | 40,762.030 | 0.405 |
| DD | 120.434 | 17.484 | 3.180 | 14.163 | 2.680 | 1.336 | 18,537.490 | 21,995.900 | 1.076 |
| WLK | — | 22.888 | 1.407 | 21.871 | 1.024 | 1.276 | 11,238.940 | 15,440.670 | 0.590 |
| CE | — | 7.696 | 1.807 | 10.891 | 0.589 | 1.377 | 5,592.790 | 17,153.020 | 0.738 |
| HUN | — | 67.298 | 0.859 | 19.246 | 0.442 | 0.928 | 2,516.260 | 4,888.580 | 0.658 |
Profitability
| Company | Operating Margin (TTM) | Net Margin (TTM) | Return on Assets (TTM) | Return on Equity (TTM) |
|---|---|---|---|---|
| LYB | 3.5% | -2.7% | 1.7% | -6.0% |
| DOW | 0.0% | -7.2% | -0.1% | -15.3% |
| DD | 13.8% | -0.4% | 2.0% | 0.9% |
| WLK | -5.8% | -14.9% | -1.0% | -16.0% |
| CE | 8.5% | -11.6% | 2.4% | -21.1% |
| HUN | -0.4% | -5.8% | -0.2% | -8.9% |
Leverage
| Company | Total Debt/Equity % (mrq) | Current Ratio (mrq) | Total Debt (mrq, USD Mil) | Operating Cash Flow TTM (USD Mil) | Free Cash Flow TTM (USD Mil) |
|---|---|---|---|---|---|
| LYB | 141.240 | 1.538 | 14,357.000 | 2,572.000 | 987.000 |
| DOW | 117.133 | 1.848 | 19,635.000 | 2,065.000 | -675.880 |
| DD | 22.594 | 2.683 | 3,217.000 | 1,214.000 | -124.750 |
| WLK | 70.489 | 2.170 | 6,380.000 | 448.000 | -22.000 |
| CE | 287.737 | 1.383 | 12,905.000 | 1,185.000 | 1,022.500 |
| HUN | 85.700 | 1.268 | 2,487.000 | 310.000 | 297.620 |
Returns
| Company | Return on Equity (TTM) | Return on Assets (TTM) |
|---|---|---|
| LYB | -6.0% | 1.7% |
| DOW | -15.3% | -0.1% |
| DD | 0.9% | 2.0% |
| WLK | -16.0% | -1.0% |
| CE | -21.1% | 2.4% |
| HUN | -8.9% | -0.2% |
Source: Yahoo Finance
Conclusion
LYB is a cyclical chemical name with a real structural asset in feedstock flexibility, but the investment case still depends on spread recovery and steadier utilization. The latest quarter showed better earnings momentum, and free cash flow remains positive, yet leverage is still elevated and TTM profitability is only modestly positive at the operating level. On balance, the shares look fairly valued to slightly cheap, with upside tied to sustained EBITDA recovery rather than multiple expansion.
Data sourced from Yahoo Finance. Not investment advice.
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