Peter Vanacker
Chief Executive Officer at LyondellBasell Industries
Thank you, Dave, and welcome to all of you. We appreciate you joining us today as we discuss our 4th-quarter and full-year 2024 results. I'm very proud of how our people navigated challenges, leveraged our strengths and remained laser-focused on our strategy throughout a year that was not easy for our industry, particularly the 4th-quarter.
Let's begin as we always do with our safety results on Slide 3. During 2024, our employees and contractors demonstrated their commitment to outstanding safety performance. I am proud to share that our total recordable injury rate for 2024 was 0.13, our second-lowest year for the company. Even more impressive, as LYB continues to grow, we achieved the lowest number of injuries in our history. This truly is a testament to our GoalZero commitment to safety and operational excellence. With such an impressive safety record, I would like to take a moment to highlight some of the amazing milestones we have reached this year. We celebrated six sites surpassing 10-plus years of no injuries. And our APS segment had record-breaking safety performance, reducing their incident rate by 39% compared to 2023. Operating safely is a prerequisite to achieving high-reliability and creating shareholder value. I applaud our team for what we have achieved in 2024 and look-forward to carrying this momentum into 2025 as we continue to strive for Goal zero performance.
Let's now turn to Slide 4 to discuss our financial results. There is no getting around it. 2024 was another challenging year for petrochemicals. However, in-spite of the headwinds, our strategic focus on value-creation, maximized cash generation and delivered solid returns to shareholders. Earnings were $6.40 per share with EBITDA of $4.3 billion. LYB generated $3.8 billion of cash from operations with an outstanding 90% cash conversion ratio. We returned $1.9 billion to shareholders in the form of dividends and repurchases.
Now let's turn to Slide 5 and take a moment to reflect on where LYB and the industry are in the current cycle. Across our key businesses, 4th-quarter industry margins are about 60% of historical averages, underscoring the depth of the current downturn. Let me share three thoughts on this challenging environment. First, this deep and prolonged downturn is not permanent. Global demand for durable goods will inevitably return following this post-pandemic downturn. Second, LYB has the potential to capture substantial upside from the cyclical recovery in volumes and margins. And third, LYB's strategic progress in unlocking incremental value could enable us to surpass our historical cycle performance. The opportunity is apparent in our sizable polypropylene business, where 4th-quarter margins are less than 50% of historical averages and operating rates are at least 5 to 10 percent points below industry norms, reflecting the severity of the downturn. For polyethylene, the margin compression is smaller, but the higher unit margins for the integrated value chain provide meaningful upside.
In contrast, our oxyfuels business is currently experiencing typical 4th-quarter seasonality. But the recent peak seen in 2023, when full-year margins averaged $560 per ton provide a measure of the upside available for this business. We recognize that current dynamics represent more than just typical cyclical pressures. They also reflect some structural shifts in the industry relative to prior cycles. Slower global growth, particularly in China, structurally higher energy costs, regulatory impacts in Europe and other regions, along with the potential for capacity additions to outpace demand have introduced sectoral challenges. These shifts are contributing to the depth and duration of the current downturn and will likely moderate future mid-cycle margins relative to the prior decades. This is why our strategic initiatives to unlock sustainable value across our portfolio are essential. These actions are enabling us to pivot to high-value opportunities and respond more effectively to changing market dynamics. Our focal points during 2025 for the transformation of our Houston refinery, the strategic review of select European assets and strong execution of our global operating model. We are confident that these actions will lead to a durable uplift of our EBITDA margins and provide lasting benefits for navigating future cycles.
Now if you turn to Slide 6, we highlight the progress on our strategy during 2024. In nearly two years since our Capital Markets Day, Brazil has unlocked approximately $1.3 billion of incremental normalized EBITDA through the execution of our three-pillar strategy. With focus and urgency, we are leveraging our strengths and extending our advantages. The successful startup of our POTBA plan in 2023 is adding approximately $450 million on a mid-cycle basis to our normalized EBITDA by leveraging our proprietary technology and advantaged feedstock positions in these attractive markets. And I'm very pleased to report that our value enhancement program is exceeding our expectations. In 2024, the VEP unlocked a year-end run-rate of more than $800 million of recurring annual EBITDA improvements, while contributing approximately $600 million to the 2024 EBITDA.
In addition, we successfully completed the divestment of our non-core EO&D business, leveraging the sale proceeds to strengthen our portfolio by acquiring a 35% share in, a cost-advantaged integrated polypropylene joint-venture. During 2025, you can expect additional progress towards capturing value through our strategic priorities. We are confident in the progress of our VEP program and expect to exceed our goal to achieve a year-end run-rate of $1 billion of recurring annual EBITDA improvements. As you have seen, our APS transformation has encountered headwinds from automotive production declines at some of our key customers in North-America and Europe. But the improved customer focus of our APS team has allowed LYB to increase our win rate for new project approvals. And Yvonne's team is doing an excellent job in growing volumes in our circular and low-carbon solutions business, while our exit from the refining business remains on-track. At the same time, we are remaining extremely disciplined in how we allocate capital during this downturn by carefully prioritizing high-return capital projects and remaining steadfast to our highly selective approach towards M&A. As Michael will share, our capital expenditures will be lower than our prior guidance, but we have been mindful to ensure our prudence does not meaningfully impact future growth. And you can be assured that we will not compromise our M&A discipline to fill growth targets with risky or marginal acquisitions.
On Slide 7, we provide an update on the growth of our Circular and Low Carbon Solutions or CLCS business. We continue to build CLCS through a focused strategy that leverages our existing infrastructure and our competitive advantages such as innovative technologies and leading positions in growing markets with a global network of deep customer relationships. Our CLCS business continues to grow at an impressive pace. CLCS volumes increased by 65% during 2024 to over 200,000 tonnes across product lines based on mechanical recycling, chemical recycling and renewable feedstocks. And we are generating attractive margins that are incremental to our fossil fuel-based polymers. Our CLCS business is targeting $1 billion of incremental EBITDA from 2 million tons of annual volumes by 2030. Despite the challenges in the chemical industry over the past year, our 2024 CLCS margins and volumes are on-track with our 2030 plan.
Please turn to Slide 8, and let's take a look at our updated views on the supply-and-demand picture for circular plastics. Market demand for circular plastics remains robust. Consumer preferences and brand owner commitments to increase utilization of recycled plastics or driving demand growth. And European regulation is bolstering demand by mandating increased utilization of recycled contents in plastic packaging. But this transition to circularity takes time. Infrastructure for plastics waste collection and sorting needs to-be-built. Large companies like LYB are developing technologies and building assets to increase supply, while smaller companies are having mixed success in improving new technologies and launching businesses. We believe capacity growth will continue to be outpaced by rising demand. As brand owners discovered the supply of circular plastics is not keeping pace with their growth plans, they are pragmatically deferring their targets for utilizing circular plastics. And some brand owners have revised previously ambitious targets to more realistic levels after considering the supply constraints. Demand growth is merely being delayed due to lack of capacity, but not being eliminated. As such, LYB and other industry observers were incorporating these constraints by scaling back 2030 forecasts for industry capacity and the addressable markets. The megatrends and investment thesis remain intact. The market for circular plastics is expected to be short of supply and supportive of attractive margins for quite some time. LYB strategy has not changed. The construction of our first Moritec chemical recycling facility in Germany is progressing well and we are planning II for Houston with regional hubs for sourcing and sorting plastic waste in both locations. We are leveraging LYB's technologies, operations and global marketing network to execute our strategy and build a leading position in these attractive markets.
Please turn to Slide nine and let's briefly review the evolving regulatory framework for circular plastics in Europe. While consumer preference is a dominant driver for circular plastics, forward-thinking regulation in Europe is also strengthening demand growth. In Europe, we see regulation moving in the right direction with PPWR, the new packaging and packaging waste regulation. With mandatory levels of recycled content in packaging, we expect PPWR will drive meaningful incremental demand for circular plastics on the order of 4 million to 5 million tons by 2030 and even more by 2040. LYB is well-positioned through its differentiated technologies and solutions to take advantage of this growing opportunity. Contact-sensitive packaging with circular content is likely to require polymers produced using chemical recycling. Our proprietary catalytic technology currently under-construction in Germany will provide a profitable commercial-scale solution.
Before I turn-over the call, I would like to take a moment to share my appreciation for our CFO, Michael McMurray. As we previously-announced, Michael has decided to retire in-line with his personal plan after five years of service to LyondellBasell. Michael has been an incredible friend and thought partner over the past three years as we developed and executed a new strategy for the company. In addition, Michael provided outstanding leadership for our global finance team, wise counsel to our commercial leaders and oversaw the recapitalization of our balance sheet to lock-in the most favorable rates and maturities we're likely to see in our lifetimes. Chief, I thank you for your leadership and look-forward to continuing our personal friendship for many years to come.
