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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.41pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Real-time Form 4 intelligence. Smarter insider tracking.
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.75pp
Lean -
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
impairments+2
downturn+2
loss+1
limitations+1
disruption+1
Positive rising
successfully+1
despite+1
Risk Factors (Item 1A)
8,644 words
Item 1A. Risk Factors.
You should carefully consider the following risk factors in addition to the other information included in this Annual Report on Form 10-K. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock.
Risks Related to our Business and Industry
The cyclicality and volatility of the industries in which we participate may cause significant fluctuations in our operating results.
Our business operations are subject to the cyclical and volatile nature of the supply-demand balance in the chemical industry. Our future operating results are expected to continue to be affected by this cyclicality and volatility. The chemical industry historically has experienced alternating periods of capacity shortages, causing prices and profit margins to increase, followed by periods of excess capacity, resulting in oversupply, declining capacity utilization rates and declining prices and profit margins.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+26
discontinued+11
downturn+6
decline+5
impairments+4
Positive rising
improvement+9
effective+4
favorable+3
gain+3
improved+2
MD&A (Item 7)
9,438 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
GENERAL
This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements, and the accompanying notes elsewhere in this report. Unless otherwise indicated, the “Company,” “we,” “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).
In February 2025, we ceased business operations at our Houston refinery. Accordingly, our refining business, previously disclosed as the Refining segment, is reported as a discontinued operation. The related operating results of our refining business are reported as discontinued operations for all periods presented.
Discontinued operations also include costs associated with the closure and dismantlement of our Berre refinery.
The discussion summarizing the significant factors affecting the results of operations and financial condition for the year ended December 31, 2023 and for the year ended December 31, 2024 compared to 2023, except as impacted by the change for discontinued operations discussed above, has been excluded from this Form 10-K and can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on February 27, 2025, of which Item 7 is incorporated herein by reference.
In addition to changes in the supply and demand for products, changes in energy prices and other worldwide economic conditions can cause volatility. These factors result in significant fluctuations in profits and cash flow from period to period and over business cycles.
New capacity additions around the world have led to periods of oversupply and lower profitability. The timing and extent of any changes to currently prevailing market conditions are uncertain and supply and demand may be unbalanced at any time. As a consequence, we are unable to accurately predict the extent or duration of future industry cycles or their effect on our business, financial condition or results of operations.
A sustained decrease in the price of crude oil may adversely impact the results of our operations, primarily in North America.
Energy costs generally follow price trends of crude oil and natural gas. These price trends may be highly volatile and cyclical. In the past, raw material and energy costs have experienced significant fluctuations that adversely affected our business segments’ results of operations. For example, we have benefited from the favorable ratio of U.S. crude oil prices to natural gas prices in the past. If the price of crude oil remains lower relative to U.S. natural gas prices or if the demand for natural gas and NGLs increases, this may have a negative impact on our results of operations.
Costs and limitations on supply of raw materials and energy may result in increased operating expenses.
The costs of raw materials and energy represent a substantial portion of our operating expenses. Due to the significant competition we face and the commodity nature of many of our products, we are not always able to pass on raw material and energy cost increases to our customers. When we do have the ability to pass on the cost increases, we are not always able to do so quickly enough to avoid adverse impacts on our results of operations.
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Cost increases for raw materials, energy, or broad-based price inflation also increase working capital needs, which could reduce our liquidity and cash flow. Even if we are able to increase our sales prices to reflect these increases, demand for products may decrease as consumers and customers reduce their consumption or use substitute products, which may have an adverse impact on our results of operations. In addition, producers in natural gas cost-advantaged regions, such as the Middle East and North America, benefit from the lower prices of natural gas and NGLs. Competition from producers in these regions may cause us to reduce exports from Europe and elsewhere. Any such reductions may increase competition for product sales within Europe and other markets, which can result in lower margins in those regions.
For some of our raw materials and utilities there are a limited number of suppliers, and in some cases, the supplies are specific to the particular geographic region in which a facility is located. It is also common in the chemical industry for a facility to have a sole, dedicated source for its utilities, such as steam, electricity and gas. Having a sole or limited number of suppliers may limit our negotiating power, particularly in the case of rising raw material costs. Any new supply agreements we enter into may not have terms as favorable as those contained in our current supply agreements. The reliance on single or limited suppliers heightens our vulnerability to supply chain interruptions, and the closure of such a supplier could cause us to be unable to profitably operate our assets.
Additionally, there is concern over the reliability of water sources, including around the U.S. Gulf Coast where several of our facilities are located. The decreased availability or less favorable pricing for water as a result of population growth, drought or regulation could negatively impact our operations, including by impacting our ability to produce or transport our products.
If our raw material or utility supplies were disrupted, our businesses would likely incur increased costs to procure alternative supplies or incur excessivedowntime, which would have a negative impact on plant operations. Disruptions of supplies may occur as a result of transportation issues resulting from natural disasters, water levels, and interruptions in marine water routes, among other causes, which can affect the operations of vessels, barges, rails, trucks and pipeline traffic. These risks are particularly prevalent in the U.S. Gulf Coast area. Additionally, increasing exports of NGLs and crude oil from the U.S. or greater restrictions on hydraulic fracturing could restrict the availability of our raw materials, thereby increasing our costs.
With increased volatility in raw material costs, our suppliers could impose more onerous terms on us, resulting in shorter payment cycles and increasing our working capital requirements.
Our ability to source raw materials or deliver products may be adversely affected by political instability, civil disturbances or other governmental actions.
We obtain a portion of our principal raw materials from sources in the Middle East and Central and South America that may be less politically stable than other areas in which we conduct business. Political instability, civil disturbances and actions by governments in these areas are more likely to substantially increase the price and decrease the supply of raw materials necessary for our operations or impair our ability to deliver products to customers, which could have a material adverse effect on our results of operations.
Incidents of civil unrest, including terrorist attacks and demonstrations that have been marked by violence, have occurred in a number of countries, including in the Middle East and South America. Some political regimes in these countries are threatened or have changed as a result of such unrest. Political instability and civil unrest could continue to spread in the region and involve other areas. Such unrest, if it continues to spread or grow in intensity, could lead to civil wars, regional conflicts or regime changes resulting in governments that are hostile to countries in which we conduct substantial business, such as in the U.S., Europe or their respective trading partners.
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Our business is capital intensive and we rely on cash generated from operations and external financing to fund our growth, dividends, and ongoing capital needs. Limitations on access to external financing could adversely affect our operating results.
We require significant capital to operate our current business and fund our dividends, share repurchases, and growth strategy. Moreover, interest payments, dividends, capital requirements of our joint ventures, the expansion of our current business or other business opportunities may require significant amounts of capital. If we need external financing, our access to credit markets and pricing of our capital is dependent upon our credit ratings and the state of the capital markets generally. There can be no assurances that we would be able to incur indebtedness on terms we deem acceptable, and it is possible that the cost of any financings could increase significantly, thereby increasing our expenses and decreasing our net income. If we are unable to generate sufficient cash flow or raise adequate external financing, including as a result of significant disruptions in the global credit markets, we could be forced to restrict our operations, lower or suspend our dividends or reduce share repurchases, and not pursue growth opportunities, which could adversely affect our operating results and shareholder returns.
We may use our $3,750 million revolving credit facility, which backs our commercial paper program, to meet our cash needs, to the extent available. As of December 31, 2025, we had no borrowings or letters of credit outstanding under the facility and no borrowings outstanding under our commercial paper program, leaving an unused and available credit capacity of $3,750 million. We may also meet our cash needs by selling receivables under our $900 million U.S. Receivables Facility. As of December 31, 2025, we had no borrowing or letters of credit outstanding and availability of $900 million under this facility. In the event of a default under our credit facilities or any of our notes, we could be required to immediately repay all outstanding borrowings and make cash deposits as collateral for all obligations the facility supports, which we may not be able to do. Any default under any of our credit arrangements could cause a default under many of our other credit agreements and debt instruments. Without waivers from lenders party to those agreements, any such default could have a material adverse effect on our ability to continue to operate.
Risks Related to our Operations
Our operations are subject to risks inherent in the chemical industry, and we could be subject to liabilities for which we are not fully insured or that are not otherwise mitigated.
We maintain property, business interruption, product, general liability, casualty and other types of insurance that we believe are appropriate for our business and operations as well as in line with industry practices. However, we are not fully insured against all potential hazardsincident to our business, including losses resulting from natural disasters or climate-related exposures, wars, terrorist acts, or cybersecurity incidents. Changes in insurance market conditions have caused, and may in the future cause, premiums and deductibles for certain insurance policies to increase substantially and, in some instances, for certain insurance to become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, we might not be able to finance the amount of the uninsured liability on terms acceptable to us, or at all, and might be obligated to divert a significant portion of our cash flow from normal business operations.
Our business, including our results of operations and reputation, could be adversely affected by safety or product liability issues.
Failure to appropriately manage occupational safety, process safety, product safety, human health, product liability and environmental risks inherent in the chemical business and associated with our products, product life cycles and production processes could result in unexpectedincidents including releases, fires, or explosions resulting in personal injury, loss of life, environmental damage, loss of revenue, legal liability, and/or operational disruption. Public perception of the risks associated with our products and production processes could impact product acceptance and influence the regulatory environment in which we operate. While we have management systems, procedures and controls to manage these risks, issues could be created by events outside of our control, including natural disasters, severe weather events and acts of sabotage.
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Further, because a part of our business involves licensing polyolefin process technology, our licensees are exposed to similar risks involved in the manufacture and marketing of polyolefins. Hazardousincidents involving our licensees, if they do result or are perceived to result from use of our technologies, may harm our reputation, threaten our relationships with other licensees and/or lead to customer attrition and financial losses. Our policy of covering these risks through contractual limitations of liability and indemnities and through insurance may not always be effective. As a result, our financial condition and results of operation would be adversely affected, and other companies with competing technologies may have the opportunity to secure a competitive advantage.
Interruptions of operations at our facilities may result in increased liabilities or lower operating results.
We own and operate large-scale facilities. Our operating results are dependent on the continued operation of our various production facilities and the ability to complete construction and maintenance projects on schedule. Interruptions at our facilities may materially reduce the productivity and profitability of a particular manufacturing facility, or our business as a whole, during and after the period of such operational difficulties. In recent years, we have had to temporarily shut down plants on the U.S. Gulf Coast as a result of various hurricanes and cold weather events impacting Texas and Louisiana.
Our operations are subject to hazards inherent in chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These potential hazards include:
• pipeline leaks and ruptures;
• explosions;
• fires;
• severe weather and natural disasters;
• mechanical failure;
• unscheduleddowntimes;
• supplier disruptions;
• labor shortages or other labor difficulties;
• transportation interruptions;
• regulatory limitations on operations;
• remediation complications;
• increased restrictions on, or the unavailability of, water for use at our manufacturing sites or for the transport of our products or raw materials;
• chemical and oil spills;
• discharges or releases of toxic or hazardous substances or gases;
• shipment of incorrect or off-specification product to customers;
• storage tank leaks;
• other environmental risks; and
• cyber-attack or other terrorist acts.
Some of these hazards may cause severedamage to or destruction of property and equipment, personal injury, loss of life, environmental damage, legal liability resulting from government action or litigation, loss of revenue, suspension of operations or the shutdown of affected facilities.
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Large capital projects can take many years to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively impacting project returns. If we are unable to complete capital projects at their expected costs and in a timely manner, or if the market conditions assumed in our project economics deteriorate, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Delays or cost increases related to capital spending programs involving engineering, procurement and construction of facilities could materially adversely affect our ability to achieve forecasted internal rates of return and operating results, or impair our ability to meet our sustainability or other targets or goals. For example, higher costs arising from delaying construction of our PO/TBA plant in Houston impacted our projected rate of return on the project. We are currently constructing our first commercial-scale chemical recycling facility using our MoReTec technology, located at our site in Wesseling, Germany. Building a commercial-scale facility utilizing a new technology can face technical and other challenges resulting in increased costs. In 2025, we announced the deferral of construction on our Flex-2 project in Channelview to preserve capital during the market downturn and also postponed the final investment decision on certain projects, such as MoReTec -2, which could result in increased costs. Delays in making required changes or upgrades to our facilities could subject us to fines or penalties as well as affect our ability to contract with our customers and supply certain products we produce. Such delays or cost increases may arise as a result of unpredictable factors, many of which are beyond our control, including:
• denial of or delay in receiving requisite regulatory approvals and/or permits;
• unplanned increases in the cost of construction materials, including due to tariffs;
• unplanned increases in labor costs;
• disruptions in transportation of components or construction materials;
• adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of vendors or suppliers;
• shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages; and
• nonperformance by, or disputes with, vendors, suppliers, contractors or subcontractors.
Any one or more of these factors could have a significant impact on our ongoing capital projects. If we were unable to make up the delays associated with such factors or to recover the related costs, or if market conditions change, it could materially and adversely affect our business, financial condition, results of operations and cash flows.
Shared control or lack of control of joint ventures or equity investments may delay decisions or actions regarding our joint ventures, or adversely affect our financial results.
A portion of our operations are conducted through joint ventures or equity investments, where control may be exercised by or shared with unaffiliated third parties. We cannot control the actions or ownership of these partners, including any nonperformance, default or bankruptcy of the joint venture or its partners. The joint ventures that we do not operate may also lack financial reporting systems to provide adequate and timely information for our reporting purposes. In addition, a joint venture may lack adequate cybersecurity protections or other controls that could impact its ability to reliably conduct operations.
Our joint venture partners may have different interests or goals than we do and may take actions contrary to our requests, policies or objectives. Differences in views among the joint venture partners also may result in delayed decisions or in failures to agree on major matters, potentially adversely affecting the business and operations of the joint ventures and in turn our business and operations. We may develop a dispute with any of our partners over decisions affecting the venture that may result in litigation, arbitration or some other form of dispute resolution. If a joint venture participant acts contrary to our interest, or is unsuccessful in conducting its business, it could harm our brand, business, results of operations and financial condition.
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We may be required to record material charges against our earnings due to any number of events including impairments of our assets.
We review our assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for impairment at least annually. The need to test for impairment can be based on several indicators, including a significant reduction in prices of or demand for products produced, a weakened outlook for profitability, a significant reduction in margins, an expectation that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, other changes to contracts or changes in the regulatory environment.
We may be required to reduce production or idle facilities for extended periods of time or exit certain businesses as a result of the cyclical nature of our industry. Specifically, oversupplies of or lack of demand for particular products or high raw material prices may cause us to reduce production. We may choose to reduce production at certain facilities because we have off-take arrangements at other facilities, which make any reductions or idlingunavailable at those facilities.
Temporary outages at our facilities can last for several quarters and sometimes longer. These outages could cause us to incur significant costs, including the expenses of maintaining and restarting these facilities. In addition, we have significant obligations under take-or-pay agreements. Even though we may reduce production at facilities, we may be required to continue to purchase or pay for utilities or raw materials under these arrangements.
Sustained unfavorable market conditions may also result in asset impairments. For example, in the third quarter of 2025, a prolongeddownturn in, and outlook for, the European petrochemical and global automotive industries, combined with the sustained decline in our market capitalization, resulted in non-cash impairment charges of $1,182 million, presented in both Goodwill impairments and Other impairments on the Consolidated Statements of Income (Loss).
Any decision to permanently close facilities or exit a business may result in impairment and other charges to earnings. For example, in March 2025, we announced the permanent closure of the PO/SM production unit at the Maasvlakte site in the Netherlands, a joint venture between us and Covestro, resulting in the recognition of $126 million in shutdown costs during the year ended December 31, 2025.
Acquisitions or dispositions of assets or businesses could disrupt our business and harm our financial condition and stock price.
We continually evaluate the performance and strategic fit of all of our businesses and evaluate whether our businesses would benefit from acquisitions to enhance growth or dispositions that would align our footprint with our overall business strategy. These transactions pose risks and challenges that could negatively impact our business and financial statements. In 2025, we agreed to sell certain European olefins and polyolefins assets and the associated business. The sites to be sold are located in Berre l’Etang (France), Münchsmünster (Germany), Carrington (United Kingdom), and Tarragona (Spain), and closing is expected in the second quarter of 2026.
Dispositions of assets or businesses involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain environmental or other contingent liabilities related to the divested business. There can be no assurance that announced dispositions - including our European divestiture - will be successfully completed on the expected timeline or at all, and transactions that are delayed or abandoned may cause additional disruption to the business. In addition, dispositions may result in significant asset impairment charges, including those related to goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of operations. In the event we are unable to successfullydivest a business or product line, we may be forced to wind down such business or product line, which could materially and adversely affect our results of operations and financial condition.
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In addition, acquisitions involve numerous risks, including meeting our standards for compliance, problems combining the purchased operations, technologies or products, unanticipated costs and liabilities, diversion of management’s attention from our core businesses, and potential loss of key employees. There can be no assurance that we will be able to integrate successfully any businesses, products, technologies, or personnel that we might acquire. The integration of businesses that we may acquire is likely to be a complex, time-consuming, and expensive process and we may not realize the anticipated revenues, synergies, or other benefits associated with our acquisitions if we do not manage and operate the acquired business up to our expectations. If we are unable to efficiently operate as a combined organization utilizing common information and communication systems, operating procedures, financial controls, and human resources practices, our business, financial condition, and results of operations may be adversely affected.
We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting or acquiring a business or product line, and any transaction we undertake could materially and adversely affect our business, financial condition, results of operations and cash flows, and may also result in a diversion of management attention, operational difficulties and losses.
Risks related to the Global Economy and Multinational Operations
Economic disruptions and downturns in general, and particularly continued global economic uncertainty or economic turmoil in emerging markets, could have a material adverse effect on our business, prospects, operating results, financial condition and cash flows.
Our results of operations can be materially affected by adverse conditions in the financial markets and depressed economic conditions generally. Economic downturns in the businesses and geographic areas in which we sell our products could substantially reduce demand for our products and result in decreased sales volumes and increased credit risk. Recessionary environments adversely affect our business because demand for our products is reduced, particularly from our customers in industrial markets generally and the automotive and housing industries specifically and may result in higher costs of capital. A significant portion of our revenues are derived from our business in Europe. In addition, most of our European transactions and assets, including cash and receivables, are denominated in euros.
We also derive significant revenues from our business in emerging markets, particularly the emerging markets in Asia and South America. Any broad-based downturn in these emerging markets, or in a key market such as China, could require us to reduce export volumes into these markets and could also require us to divert product sales to less profitable markets. Any of these conditions could ultimately harm our overall business, prospects, operating results, financial condition and cash flows.
We sell products in highly competitive global markets and face significant price pressures.
We sell our products in highly competitive global markets. Due to the commodity nature of many of our products, competition in these markets is based primarily on price and, to a lesser extent, on product performance, product quality, product deliverability, reliability of supply and customer service. Often, we are not able to protect our market position for these products by product differentiation and may not be able to pass on cost increases to our customers due to the significant competition in our industry.
In addition, we face increased competition from companies that may have greater financial resources and different cost structures or strategic goals than us. These include large integrated oil companies (some of which also have chemical businesses), government-owned businesses, and companies that receive subsidies or other government incentives to produce certain products in a specified geographic region. Continuing competition from these companies, especially in our olefin business, could limit our ability to increase product sales prices in response to raw material and other cost increases, or could cause us to reduce product sales prices to compete effectively, which would reduce our profitability. Competitors with different cost structures or strategic goals than we have may be able to invest significant capital into their businesses, including expenditures for research and development. In addition, specialty products we produce may become commoditized over time. Increased competition could result in lower prices or lower sales volumes, which would have a negative impact on our results of operations.
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We operate internationally and are subject to exchange rate fluctuations, exchange controls, tariffs, political risks and other risks relating to international operations.
We operate internationally and are subject to the risks of doing business on a global level. These risks include fluctuations in currency exchange rates, economic instability and disruptions, restrictions on the transfer of funds and the imposition of trade restrictions or duties and tariffs, and complex regulations concerning privacy and data security. Additional risks from our multinational business include transportation delays and interruptions, war, terrorist activities, epidemics, pandemics, political instability, import and export controls, access to infrastructure, sanctions, changes in governmental policies, labor unrest and current and changing regulatory environments.
We generate revenues from export sales and operations that may be denominated in currencies other than the relevant functional currency. Exchange rates between these currencies and functional currencies in recent years have fluctuated significantly and may do so in the future. It is possible that fluctuations in exchange rates will result in reduced operating results. Additionally, we operate with the objective of having our worldwide cash available in the locations where it is needed, including the United Kingdom for our parent company’s significant cash obligations as a result of dividend payments. It is possible that we may not always be able to provide cash to other jurisdictions when needed or that such transfers of cash could be subject to additional taxes, including withholding taxes.
Our operating results could be negatively affected by the laws, rules and regulations, as well as political environments, in the jurisdictions in which we operate. There could be reduced demand for our products, decreases in the prices at which we can sell our products and disruptions of production or other operations. Trade protection measures such as tariffs, quotas, duties, safeguard measures or anti-dumping duties imposed in the countries in which we operate could negatively impact our business. Additionally, there may be substantial capital and other costs to comply with regulations and/or increased security costs or insurance premiums, any of which could reduce our operating results.
We obtain a portion of our principal raw materials from international sources that are subject to these same risks. Our compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other laws or regulations to which we may be subject could be challenged. Furthermore, these laws may be modified, the result of which may be to prevent or limit subsidiaries from transferring cash to us.
Furthermore, we are subject to certain existing, and may be subject to possible future, laws that limit or may limit our activities while some of our competitors may not be subject to such laws, which may adversely affect our competitiveness.
Changes in tax laws and regulations could affect our tax rate, financial condition and results of operations.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments and is subject to taxes in the U.S. and non-U.S. jurisdictions. Significant changes to tax laws and regulations in these jurisdictions or their interpretation could have a material impact on our effective income tax rate. Our future effective income tax rates could also fluctuate based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, changes in valuation allowances, changes in foreign exchange gains/losses, the amount of exempt income, and changes in unrecognized tax benefits associated with uncertain tax positions. Our tax returns are periodically audited or subjected to review by tax authorities, and we regularly evaluate the likelihood of an adverse result of an examination, however any adverse result of these examinations could also have a material impact on our effective income tax rate, financial condition and results of operations.
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Risks Related to Health, Safety, and the Environment
We cannot predict with certainty the extent of future costs under environmental, health and safety and other laws and regulations, and cannot guarantee they will not be material.
We may face liability arising out of the normal course of business, including alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our current or former facilities, or exposure to products or chemicals that we manufacture, handle or own. In addition, because our products are components of a variety of other end-use products, we, along with other members of the chemical industry, are subject to potential claims related to those end-use products. Any substantial increase in the success of these types of claims could negatively affect our operating results.
We are subject to extensive national, regional, state and local environmental laws, regulations, directives, rules and ordinances concerning pollution, protection of the environment, hazardous materials, health and safety, the security of our facilities, and the safety of our products. Despite recent government actions to delay or decrease regulatory obligations in certain jurisdictions, we generally expect that these requirements may become more stringent over the longer term. Changes to such laws could result in restrictions on our operations, denial of permits, loss of business opportunities, increased operating costs or additional capital expenditures. We could incur significant costs or operational restrictions due to violations of or liabilities under such laws and regulations in the form of fines, penalties, and injunctive relief. Any substantial liability under such laws could have a material adverse effect on our financial condition, results of operations and cash flows. Additionally, we are required to have permits for our businesses and are subject to licensing regulations. These permits and licenses are subject to renewal, modification and in some circumstances, revocation. Further, the permits and licenses are often difficult, time consuming and costly to obtain and could contain conditions that limit our operations.
We may incur substantial costs to comply with climate change legislation and related regulatory initiatives.
There has been a broad range of proposed or promulgated international, national and state laws focusing on GHG emission reduction and global climate change. These proposed or promulgated laws apply or could apply in countries where we have interests or may have interests in the future. Laws and regulations in this field continue to evolve and, at this stage it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation.
Jurisdictions in which we operate, including, in particular, the European Union (“EU”), have prepared national legislation and protection plans to implement their emission reduction commitments under the 2015 Paris Agreement. Our operations in Europe participate in the EU Emissions Trading System (“ETS”) and we meet our obligations through a combination of free and purchased emission allowances. We anticipate that climate regulation in the EU will result in an accelerated reduction of our free allowances, and higher market prices for purchased allowances. In addition, it remains uncertain whether the EU will implement a carbon border adjustment mechanism for organic chemicals and polymers, and, if so, how such a mechanism would affect the competitiveness of our products and our exposure to higher carbon costs.
Although the U.S. announced its intent to withdraw from international climate agreements and has taken steps to roll back climate regulations, several state governments have promulgated regulations directed at GHG emissions reductions from certain types of facilities, and additional regulations could be promulgated in the future, that could result in increased operating costs for compliance, required acquisition or trading of emission allowances, or other costs.
Non-Governmental Organizations have been active in filing lawsuits against governments and private parties in various jurisdictions around the world seeking enforcement of existing laws and new requirements to reduce GHG emissions. In one case decided in The Netherlands in November 2024, the court held that, although there was no basis to support an order for a specific emission reduction target, Royal Dutch Shell had an obligation to take measures to combat climate change. These types of laws, regulations, and litigation results could increase the cost of purchased energy and increase costs of compliance in various locations.
Compliance with climate regulations may result in increased permitting necessary for the operation of our business or for any of our growth plans. Difficulties in obtaining such permits could have an adverse effect on our future growth. In addition, any future potential climate regulations, legislation, or litigation results could impose additional operating restrictions or delays in implementing growth projects or other capital investments, require us to incur increased costs, and could have a material adverse effect on our business and results of operations.
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Legislation and regulatory initiatives could lead to a decrease in demand for our products or reputational harm.
New or revised governmental regulations and independent studies relating to the effect of our products on health, safety and the environment may affect demand for our products and the cost of producing our products. Initiatives by governments and private interest groups will potentially result in increased toxicological testing and risk assessments of a wide variety of chemicals, including chemicals used or produced by us. New or revised legislation or regulations could result in additional use restrictions and/or bans of certain chemicals. For example, in the EU, the European Commission is expected to continue to develop and implement legislative changes to the EU regulatory frameworks for chemicals including the Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”), and the Classification, Labelling and Packaging Regulation (“CLP”) that could result in increased compliance costs, additional restrictions, and/or bans of chemicals used or produced by us. In the U.S., changes to the U.S. Environmental Protection Agency’s risk evaluation process under the Toxic Substances Control Act (“TSCA”) could also result in additional restrictions and/or bans of chemicals used or produced by us.
Assessments under TSCA, REACH or similar programs or regulations in other state or national jurisdictions may result in heightened concerns about the chemicals we use or produce and may result in additional requirements or bans being placed on the production, handling, labeling or use of those chemicals. Such concerns and additional requirements could also increase the cost incurred by our customers to use our chemical products and otherwise limit the use of these products, which could lead to a decrease in demand for these products. Such a decrease in demand could have an adverse impact on our business and results of operations. International regulators, investors, consumers and other stakeholders are focused on environmental considerations. Disclosure obligations have required and may continue to require us to implement new practices and reporting processes and have created and will continue to create additional compliance risk. If we are unable to meet our circularity, greenhouse gas reduction or gender diversity goals, or if we are perceived by regulators, customers, stockholders or employees to have not responded appropriately to these issues, our reputation, and therefore our ability to sell our products, could be negatively impacted. Alternatively, we may also face scrutiny, reputational risk, lawsuits or market access restrictions from parties regarding our sustainability initiatives. Providers of debt and equity financing may also consider our sustainability performance and external ratings, which we have limited ability to influence, which could impact our cost of capital and adversely affect our business.
The physical impacts of climate change can negatively impact our facilities and operations.
Potential physical impacts of climate change include increased frequency and severity of hurricanes and floods as well as freezing conditions, tornadoes, and global sea level rise. Although we have preparedness plans in place designed to minimize impacts and enhance safety, should an event occur, it could have the potential to disrupt our supply chain and operations. A number of our facilities are located on the U.S. Gulf Coast, which has been impacted by hurricanes that have required us to temporarily shut down operations at those sites. Our sites rely on rivers and other waterways for transportation that may experience restrictions in times of drought or other unseasonal weather variation. In addition, scarcity of water and drought conditions could reduce the availability of fresh water needed to produce our products which could increase our costs of operations.
Increased regulation or deselection of plastic could lead to a decrease in demand growth for some of our products.
There is concern globally with the accumulation of plastic, plastic additives, and microplastics in the environment, particularly in waterways and oceans. Additionally, plastics face some public backlash and scrutiny, as well as governmental investigations and enforcement, and private litigation. Policy measures to address these concerns are being discussed or implemented by governments at various levels. For example, over the past two years the United Nations Environment Program has been overseeing the development of a new international legally binding instrument on plastic pollution. While the negotiations ended in 2025 without reaching an agreement, they demonstrated significant interest globally in addressing these issues. The European Union has been undertaking a series of actions under its Circular Economy Action Plan, including adoption of the Single Use Plastics Directive in 2019, which introduced policy measures for single use plastics including bans, product design requirements, extended producer responsibility obligations, and labeling requirements, and adoption of the Packaging and Packaging Waste Regulation to replace the Packaging and Packaging Waste Directive. In addition, a host of single-use plastic bans, taxes and Extended Producer Responsibility (“EPR”) bills have been passed by countries around the world and states and municipalities throughout the U.S. Consumer deselection, increased regulation of, or prohibition on, the manufacturing or use of plastic or plastic products could limit the use of these products or increase the costs incurred by our customers to use such products, and could lead to a decrease in demand, particularly for fossil-based PE, PP, and other products we make. Such a decrease in demand could adversely affect our business, operating results, and financial condition.
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Failure to effectively and timely achieve our GHG emissions reduction goals could damage our reputation and have an adverse effect on the demand for our products.
We have set GHG emissions reduction goals for 2030 and aim to achieve net zero scope 1 and 2 GHG emissions by 2050. In 2026, we updated these goals. Our ability to achieve these updated goals depends on many factors, including the development and availability of technology, our ability to secure permits and emissions credits, project execution risk, the availability of infrastructure, the availability of suppliers, the availability of supportive governmental policies, industry standards and markets, evolving regulatory requirements, competitor actions, and customer and consumer preferences. We may also not timely adapt to changes or methods in carbon pricing that could increase our costs and reduce our competitiveness. The cost associated with our GHG emissions reduction goals could be significant.
We may need to further update our goals to address market changes. We also participate, along with other companies, institutes, universities, trade associations and other organizations, in various initiatives, campaigns, and other projects that express various ambitions, aspirations and goals related to climate change, emissions and energy transition. Our individual ambitions, future performance or policies may differ from the ambitions of those organizations or the individual ambitions of other participants in these various initiatives, campaigns, and other projects, and we may unilaterally change our own ambitions, aspirations and goals in ways that no longer align with these organizations. Failure to achieve our emissions targets could result in reputational harm, enforcement or litigation, changing investor sentiment regarding investment in LyondellBasell or a negative impact on access to and cost of capital.
Failure to achieve our circularity goals could have an adverse effect on the demand for our products and damage our reputation.
We have set a 2030 circularity goal for producing and marketing recycled and renewable-based polymers annually by 2030. Many of our customers also have goals to increase the recycled and renewable content in their own products and packaging. Our ability to achieve our goal depends on many factors, including the availability of collection and sortation infrastructure, evolving regulations on chemical recycling and recycled content, customer demand, our ability to grow our CLCS business, make investments, develop and deploy new technologies, expand the global footprint of our recycling facilities and joint ventures, secure access to feedstock, and manufacture recycled and low carbon products at commercial scale. In 2024, we began construction on our first industrial-scale chemical recycling plant at our site in Wesseling, Germany, which utilizes our proprietary MoReTec technology, and we may encounter difficulties in the construction or operation of the facility, or the implementation of MoReTec technology at that scale, which could negatively impact our ability to achieve our goals and damage our reputation with customers and other stakeholders.
General Risk Factors
Increased IT and cybersecurity threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, data, products, facilities and services, and the expansion of related regulatory requirements could increase our costs and disrupt our operations.
Increased global information cybersecurity threats and more sophisticated, targeted computer crime pose a risk to the confidentiality, availability and integrity of our data, operations and infrastructure. Our cybersecurity and infrastructure protection technologies, disaster recovery plans and systems, employee training and vendor risk management may not be sufficient to defend us against all unauthorized attempts to access our information or impact our systems. We – and our third-party vendors and service providers – have been and may in the future be subject to cybersecurity events of varying degrees. To date, the impacts of prior events have not had a material adverse effect on us, however, there is no assurance that such an event has not already occurred and we are unaware of it, or that we will not suffer a cybersecurity breach and loss in the future. We devote significant resources to prevent cybersecurity events, incidents, and breaches and to protect our data, but our systems and procedures for identifying and protecting against such attacks and mitigating such risks may prove to be insufficient due to system vulnerabilities, human error or malfeasance, or other factors.
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Cybersecurity events involving our information technology systems or those of our third-party vendors and service providers can result in disclosure, unavailability, loss of integrity, theft, destruction, loss, misappropriation or release of confidential financial data, regulated personally identifying or identifiable information, intellectual property and other information; give rise to remediation or other expenses; result in litigation, claims and increased regulatory review or scrutiny; reduce our customers’ willingness to do business with us; disrupt our operations and the services we provide to customers; and subject us to litigation and legal liability under international, U.S. federal and state laws and regulations. Any of such results could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows.
We are subject to a variety of laws and regulations in Europe, the United States and other jurisdictions regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data, and impose obligations on us to ensure transparency, purpose limitation, data minimization, accuracy, storage limitation, integrity, confidentiality, and accountability. Compliance with and interpretation of various data privacy regulations continue to evolve, and any violation could subject us to legal claims, regulatory penalties, and damage to our reputation.
In addition, the complex and dynamic regulatory environment surrounding artificial intelligence (“AI”), including generative AI, subjects us to a variety of risks. These risks include, but are not limited to, data privacy and security vulnerabilities, intellectual property patent, copyright, and misappropriationclaims, unauthorized third-party usage of data associated with training models, and malicious use and advanced deceitful communication methods. AI may be leveraged by threat actors to enhance the volume and sophistication of their attacks, potentially resulting in a cybersecurity event affecting us or our suppliers. Furthermore, we face potential missedinnovationopportunities and competitive disadvantages. The evolving nature of AI regulations, such as the European Union Artificial Intelligence Act and other global legislative efforts, adds to the uncertainty and complexity of compliance. Changes in these regulations may require significant adjustments to our AI strategies and operations, potentially leading to increased costs and operational disruptions.
Many of our businesses depend on our intellectual property. Our future success will depend in part on our ability to develop new technologies and protect our intellectual property rights, and our inability to do so could reduce our ability to maintain our competitiveness and margins.
We have a significant worldwide patent portfolio of issued and pending patents, and our future results could be impacted by our ability to successfully develop and protect new processes and technologies. Our patents and patent applications, together with proprietary technical know-how, are significant to our competitive position, particularly with regard to PO, intermediate chemicals, polyolefins, licensing and catalysts. We rely on the patent, copyright and trade secret laws of the countries in which we operate to protect our investment in research and development, manufacturing and marketing. We operate plants, sell catalysts and products, participate in joint ventures, and license our process technology in many foreign jurisdictions, including those having heightened risks for intellectual property. In some of these instances, we must disclose at least a portion of our technology to third parties or regulatory bodies. In these cases, we rely primarily on contracts and trade secret laws to protect the associated trade secrets. However, we may be unable to prevent third parties from using our intellectual property without authorization. Proceedings to protect these rights could be costly, and we may not prevail.
The failure of our patents or confidentiality agreements to protect our processes, apparatuses, technology, trade secrets or proprietary know-how could result in significantly lower revenues, reduced profit margins and cash flows and/or loss of market share. We also may be subject to claims that our technology, patents or other intellectual property infringes on a third party’s intellectual property rights. Unfavorable resolution of these claims could result in restrictions on our ability to deliver the related service or in a settlement that could be material to us.
Adverse results of legal proceedings could materially adversely affect us.
We are subject to and may in the future be subject to a variety of legal proceedings, claims, and controversies that arise out of the ordinary conduct of our business. Results and timing of these legal matters cannot be predicted with certainty. Irrespective of the merits, litigation and dispute resolution may be both lengthy and disruptive to our operations and may cause significant expenditure and diversion of management attention. We may be faced with significant monetary damages or injunctive relief against us that could have an adverse impact on our business and results of operations should we fail to prevail in certain matters.
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In 2024, we and eight other industry defendants were named in a proposed class action in Kansas related to industry-wide claims about plastics recyclability. The causes of action include public nuisance from plastic waste in the environment, antitrust, unfair competition, consumer protection, and unjust enrichment. It is possible that this case and similar cases in the future could result in significant fines or damages, or injunctive action that could adversely affect our ability to conduct our business or negatively impact our financial condition or results of operations.
If we lose key employees or are unable to attract and retain the employees we need, our business and operating results could be adversely affected.
Our success depends on our ability to attract and retain key personnel, and we rely heavily on our management team. The inability to recruit and retain key personnel or the unexpectedloss of key personnel may adversely affect our operations. In addition, because of the reliance on our management team, our future success depends in part on our ability to identify and develop talent to succeed senior management. The retention of key personnel and appropriate senior management succession planning will continue to be critically important to the successful implementation of our strategies.
There is substantial and continuous competition for engineering, manufacturing, and operations employees. We may not be successful in attracting and retaining such personnel, and we may experience increased compensation and training costs that may not be offset by either improved productivity or higher sales. We have from time to time experienced, and we may continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and may not be able to fill positions in desired geographic areas or at all.
Significant changes in pension fund investment performance or assumptions relating to pension costs may adversely affect the valuation of pension obligations, the funded status of pension plans, and our pension cost.
Our pension cost is materially affected by the discount rates used to measure pension obligations, the level of plan assets available to fund those obligations at the measurement date and the expected long-term rates of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of invested assets may result in corresponding increases and decreases in the value of plan assets, particularly equity securities, or in a change of the expected rate of return on plan assets. Any changes in key actuarial assumptions, such as the discount rate or mortality rate, would impact the valuation of pension obligations, affecting the reported funded status of our pension plans as well as the net periodic pension cost in the following fiscal years.
Many of our current pension plans have projected benefit obligations that exceed the fair value of the plan assets. As of December 31, 2025, the aggregate deficit was $863 million. Any declines in the fair values of the pension plans’ assets could require additional payments by us in order to maintain specified funding levels.
Our pension plans are subject to legislative and regulatory requirements of applicable jurisdictions, which could include, under certain circumstances, local governmental authority to terminate the plan.
See Note 16 to the Consolidated Financial Statements for additional information regarding pensions and other post-retirement benefits.
OVERVIEW
Results from continuing operations for 2025 decreased when compared to 2024, primarily as a result of non-cash impairment charges recognized in 2025 in our Olefins and Polyolefins-Europe, Asia, International (“O&P-EAI”) and Advanced Polymer Solutions (“APS”) segments. Throughout 2025, petrochemical markets faced significant headwinds from global trade disruptions, falling oil prices and capacity additions which outpaced global demand growth. In our Olefins and Polyolefins-Americas (“O&P-Americas”) segment, polyethylene chain margins fell due to trade issues, higher feedstock costs and a well-supplied market. In our O&P-EAI segment, polymer margins declined throughout 2025 due to competition from imports, partially offset by lower feedstock costs. In our Intermediates and Derivatives (“I&D”) segment, new octane capacity pressured oxyfuels and related products margins through most of the summer driving season. Our APS segment delivered meaningful gains through margin improvement, portfolio optimization and increased business win rates.
In 2025, we agreed to sell certain European olefins and polyolefins assets and the associated business. The sale is expected to close in the second quarter of 2026. In connection with the sale, we expect to recognize a loss of approximately $700 million to $900 million upon closing, which includes a cash contribution of approximately $300 million to the sold businesses prior to closing.
During 2025, we generated $2.3 billion in cash from operating activities. We invested $1.9 billion in capital expenditures and returned $2.0 billion to shareholders through dividend payments and share repurchases.
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Results of operations for the periods discussed are presented in the table below.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
Cost of sales
Goodwill impairments
Other impairments
Selling, general and administrative expenses
Research and development expenses
Operating income (loss)
Interest expense
Interest income
Gain (loss) on sale of business
Other income (expense), net
Loss from equity investments
Income (loss) from continuing operations before income taxes
Provision for income taxes
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)
Other comprehensive income (loss), net of tax—
Financial derivatives
Defined benefit pension and other postretirement benefit plans
Foreign currency translations
Total other comprehensive income (loss), net of tax
Comprehensive income (loss)
RESULTS OF OPERATIONS
Revenues —Revenues decreased by $3,241 million, or 10%, in 2025 compared to 2024. Lower average sales prices for many of our products resulted in an 8% decrease in revenues, while lower sales volumes driven by lower demand led to a 4% decrease. These declines were partially offset by favorable foreign exchange impacts, which led to a 2% increase in revenues. Revenues were relatively flat in 2024 compared to 2023.
Cost of Sales —Cost of sales decreased by $1,174 million, or 4%, in 2025 compared to 2024, primarily due to lower feedstock and energy costs. In 2024, cost of sales increased by $315 million, or 1%, compared to 2023, mainly driven by higher feedstock and energy costs.
Fluctuations in our cost of sales are generally driven by changes in feedstock and energy costs. After giving consideration to the reclassification of the refinery business to discontinued operations, feedstock and energy costs represent approximately 70% of total annual cost of sales over the last three years. Other variable costs account for approximately 10% to 15%, while fixed operating costs, consisting primarily of expenses related to employee compensation, depreciation and amortization, and maintenance, account for the remainder.
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Impairments —In the third quarter of 2025, a prolongeddownturn in, and outlook for, the European petrochemical and global automotive industries, particularly affecting our O&P-EAI and APS segments, combined with the sustained decline in our market capitalization, drove non-cash impairment charges of $1,182 million within these segments. Additionally, during 2025, we recognized other non-cash impairment charges of $69 million, primarily related to property, plant and equipment in our O&P-Americas and O&P-EAI segments.
During 2024, we recognized non-cash impairment charges of $949 million, primarily consisting of $892 million of property, plant and equipment impairments in our O&P-EAI and APS segments.
During 2023, we recognized non-cash impairment charges of $507 million, primarily consisting of a $252 million goodwill impairment charge in our APS segment and a $192 million impairment charge related to our European PO Joint Venture, recognized in our I&D segment.
See Notes 9 and 10 to the Consolidated Financial Statements for additional information regarding impairment charges.
SG&A Expenses —Selling, general and administrative (“SG&A”) expenses decreased by $32 million, or 2%, in 2025 compared to 2024, with approximately 70% of the decrease attributable to lower professional fees and the remainder primarily driven by reduced spending on strategic projects. In 2024, SG&A expenses increased by $103 million, or 7%, compared to 2023, primarily due to higher employee-related expenses.
Operating Income (Loss) —Operating income decreased by $2,338 million, or 122%, in 2025 compared to 2024. In 2025, operating income for our O&P-Americas, APS, I&D and Technology segments decreased by $1,364 million, $695 million, $523 million and $201 million, respectively, compared to 2024. These decreases were partially offset by an increase of $324 million in our O&P EAI segment. Results for each of our business segments are discussed further in the Segment Analysis section below.
Operating income decreased by $807 million, or 30%, in 2024 compared to 2023. The decline was driven primarily by an $848 million decrease in our O&P‑EAI segment, largely reflecting an $837 million non‑cash impairment related to assets included in our European strategic review. Operating income in our I&D segment decreased by $311 million primarily due to lower oxyfuels and related products margins, partially offset by the absence of a $192 million impairment charge recognized in 2023. Results for our APS segment improved $213 million primarily due to impairment charges of $252 million recognized in 2023. Our O&P‑Americas segment improved $140 million driven by improved olefins margins. Operating income in our Technology segment increased by $4 million, reflecting higher licensing results.
Interest Income— Interest income decreased by $53 million, or 35%, in 2025 compared to 2024. Approximately 55% of the decrease was driven by lower average cash balances invested in short-term marketable securities, with the remainder due to lower average interest rates. Interest income increased $21 million, or 16%, in 2024 compared to 2023, primarily as a result of increased average cash balances invested in short-term marketable securities.
Gain (Loss) on Sale of Business —In the second quarter of 2024, we completed the sale of our Ethylene Oxide & Derivatives (“EO&D”) business and associated production facilities located in Bayport, Texas and recognized a pre-tax gain of $284 million. See Note 9 to the Consolidated Financial Statements for additional information.
Other Income (Expense), Net —Other income increased by $66 million, or 140%, in 2025 compared to 2024, primarily due to a $67 million gain recognized on the sale of excess European emissions credits during 2025. In 2024, other income increased by $105 million, or 181%, compared to 2023. Approximately $50 million of this increase was due to the net impact of foreign exchange transactions, while the remaining increase was primarily attributable to the sale of precious metals and the impact of legal settlements, each contributing approximately $25 million.
Loss from Equity Investments —Results from equity investments increased by $205 million, or 94%, in 2025 compared to 2024, primarily due to the absence of a deferred tax valuation allowance charge and equity losses related to a Chinese joint venture in our O&P-EAI segment that were recognized in 2024.
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Income Taxes— Our effective income tax rates of (9.8)% in 2025 and 15.2% in 2024 resulted in tax expense of $70 million and $259 million, respectively. The lower effective tax rate for 2025 was primarily attributable to changes in earnings in countries with varying statutory tax rates, largely attributable to third quarter non-cash impairments decreasing the effective tax rate by 66.2 percentage points in comparison to 2024. This decrease was partially offset by increases in the effective tax rate related to fluctuations in foreign exchange gains and losses, coupled with the establishment of valuation allowances against deferred tax assets, which increased the effective tax rate by 24.4 percentage points and 23.2 percentage points, respectively.
Our effective income tax rates of 15.2% in 2024 and 18.8% in 2023 resulted in tax expense of $259 million and $433 million, respectively. The lower effective tax rate for 2024 was primarily attributable to changes in earnings in countries with varying statutory tax rates, largely attributable to fourth quarter non-cash impairments decreasing the effective tax rate by 4.7 percentage points in comparison to 2023. There was a further decrease in the effective tax rate of 1.8 percentage points related to fluctuations in foreign exchange gains and losses, partially offset by an increase in the effective tax rate of 2.5 percentage points related to reduced exempt income in 2024.
For additional information, see Note 18 to the Consolidated Financial Statements.
Income (Loss) from Discontinued Operations, Net of Tax— Income (loss) from discontinued operations, net of tax, increased by $122 million, or 163%, in 2025 compared to 2024. In 2025, we recognized a last-in, first-out (“LIFO”) benefit of $ 196 million, net of tax, resulting from the liquidation of low-cost inventory, and a gain on the sale of pipelines of approximately $24 million, net of tax. These benefits were partially offset by a decrease of $40 million in income from discontinued operations, net of tax, related to our Berre refinery, primarily due to the recognition of an environmental reserve in 2025. The remainder of the change was primarily driven by increased costs as we ceased business operations at our Houston refinery in February 2025.
Income (loss) from discontinued operations, net of tax, decreased by $330 million, or 129%, in 2024 compared to 2023. Lower margins from our Houston refinery, driven by a decrease in the Maya 2-1-1 industry crack spread, resulted in a 225% decrease in results from discontinued operations compared to the prior period. A decrease in costs related to our exit from the refinery business resulted in a 61% benefit in Income (loss) from discontinued operations, net of tax. The remainder of the change was primarily related to a decrease in income tax expense.
Comprehensive Income (Loss)— Comprehensive income (loss) decreased by $1,827 million in 2025 compared to 2024, primarily due to a decrease in net income (loss). The activities from the remaining components of Comprehensive income (loss) are discussed below.
Financial derivatives designated as cash flow hedges, primarily our commodity swaps, led to a decrease in Comprehensive income (loss) of $137 million in 2025 compared to 2024, reflecting commodity pricing volatility. Foreign currency translations increased Comprehensive income (loss) by $368 million in 2025 compared to 2024, primarily due to the weakening of the U.S. dollar relative to the euro in 2025, partially offset by the effective portion of our net investment hedges. See Notes 15, 16 and 20 to the Consolidated Financial Statements for further discussions.
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Segment Analysis
We use net income (loss) before interest, income taxes, and depreciation and amortization (“EBITDA”) as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of, and allocate resources to, our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other post-retirement benefits other than service costs, are included in “Other.” See the table below for a reconciliation of EBITDA to its nearest generally accepted accounting principles (“GAAP”) measure.
The following table presents the reconciliation of Net income (loss) to EBITDA for each of the periods presented:
Year Ended December 31,
Millions of dollars
Net income (loss)
Provision for income taxes
Depreciation and amortization
Interest expense, net
EBITDA
Our continuing operations are managed through five reportable segments: O&P-Americas, O&P-EAI, I&D, APS and Technology. Revenues and other information for the periods presented are reflected in the tables below for our reportable segments:
Year Ended December 31,
Millions of dollars
Sales and other operating revenues:
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Technology segment
Other, including intersegment eliminations
Total
Operating income (loss):
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Technology segment
Other, including intersegment eliminations
Total
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Year Ended December 31,
Millions of dollars
Depreciation and amortization:
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Technology segment
Total
Income (loss) from equity investments:
O&P-Americas segment
O&P-EAI segment
I&D segment
Total
Impairments:
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Total
Gain (loss) on sale of business:
I&D segment
APS segment
Total
Other income (expense), net:
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Technology segment
Other, including intersegment eliminations
Total
EBITDA:
O&P-Americas segment
O&P-EAI segment
I&D segment
APS segment
Technology segment
Discontinued operations
Other, including intersegment eliminations
Total
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Olefins and Polyolefins-Americas Segment
Overview —EBITDA decreased in 2025 relative to 2024 primarily due to lower margins.
In calculating the impact of margin and volume on EBITDA, consistent with industry practice, we offset revenues and volumes related to ethylene co-products against the cost to produce ethylene. Volume and price impacts of ethylene co-products are reported in margin.
Ethylene Raw Materials —Ethylene and its co-products are produced from two major raw material groups:
• natural gas liquids, principally ethane and propane, the prices of which are generally affected by natural gas prices; and
• crude oil-based liquids (“liquids” or “heavy liquids”), including naphtha, condensates and gas oils, the prices of which are generally related to crude oil prices.
We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. Ethane made up approximately 75% to 80% of the raw materials used in our North American crackers in 2025 and 2024.
The following table sets forth selected financial information for the O&P-Americas segment including Income from equity investments, which is a component of EBITDA.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
Income from equity investments
EBITDA
Revenues —Revenues decreased by $1,732 million, or 15%, in 2025 compared to 2024. Lower average sales prices across most of our products, driven by a lower oil price environment and ample product supply, resulted in a 9% decrease in revenue. Lower volumes, driven by planned and unplannedoutages, resulted in a 6% decrease in revenue.
EBITDA —EBITDA decreased by $1,301 million, or 53%, in 2025 compared to 2024. Lower olefins results led to a 36% decrease in EBITDA, primarily driven by lower margins from a decrease in co-product contribution. Lower polyethylene results led to a 16% decrease in EBITDA, primarily due to margin compression attributed to unfavorable macroeconomic conditions.
Olefins and Polyolefins-Europe, Asia, International Segment
Overview — Segment results were affected by impairment charges recognized in 2024 and 2025. Polymer margins weakened during 2025 as increased import competition created unfavorable market conditions.
In calculating the impact of margin and volume on EBITDA, consistent with industry practice, we offset revenues and volumes related to ethylene co-products against the cost to produce ethylene. Volume and price impacts of ethylene co-products are reported in margin.
Ethylene Raw Materials —In Europe, naphtha is the primary raw material for our ethylene production and represented approximately 70% and 60% of the raw materials used in 2025 and 2024, respectively.
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The following table sets forth selected financial information for the O&P-EAI segment including Loss from equity investments, which is a component of EBITDA.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
Loss from equity investments
EBITDA
Revenues —Revenues decreased by $640 million, or 6%, in 2025 compared to 2024. Lower average sales prices, primarily as a result of a decrease in the price of naphtha, drove an 8% decrease in revenues. Lower volumes resulted in a 2% decrease in revenue, equally due to lower demand and unplanneddowntime. Favorable foreign exchange impacts resulted in a 4% increase in revenue.
EBITDA —EBITDA increased by $534 million, or 54%, in 2025 compared to 2024. During 2025, we recognized a $400 million non-cash goodwill impairment charge related to a prolongeddownturn in, and outlook for, the European petrochemical industry. During 2024, we recognized an $837 million non-cash impairment of property, plant and equipment related to our European assets included in our strategic review.
Additionally, results from equity investments resulted in a 17% increase in EBITDA, primarily as a result of the absence of both a deferred tax valuation allowance for a Chinese joint venture recognized during the fourth quarter of 2024 and related equity losses. The remaining decrease was primarily due to lower polymer margins, driven by lower spreads from unfavorable pricing from weaker demand.
Intermediates and Derivatives Segment
Overview —EBITDA decreased in 2025 compared to 2024 driven by lower oxyfuels and related products results, shutdown costs related to our European PO Joint Venture recognized in 2025, and the absence of a gain on sale of our EO&D business recognized in the second quarter of 2024.
The following table sets forth selected financial information for the I&D segment including Income (loss) from equity investments, which is a component of EBITDA.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
Income (loss) from equity investments
EBITDA
Revenues —Revenues decreased by $1,355 million, or 13%, in 2025 compared to 2024. Lower average sales prices resulted in a 10% decrease in revenue driven primarily by oxyfuels and related products as a result of lower crude pricing. A decline in sales volumes due to the second quarter of 2024 sale of our EO&D business and associated production facilities resulted in a 4% decrease in revenue. Favorable foreign exchange impacts resulted in a 1% increase in revenue.
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EBITDA —EBITDA decreased $786 million, or 47%, in 2025 compared to 2024. During 2024, we recognized a $284 million gain on the sale of our EO&D business. During 2025, we permanently closed our European PO Joint Venture incurring $126 million of shutdown costs in the year. Lower oxyfuels and related products margins resulted in a 24% decrease in EBITDA driven by lower crude pricing from softer global demand as compared to the prior year. This decrease was partially offset by improved oxyfuel and related products volumes which increased EBITDA by 9% primarily due to more sales volumes.
Advanced Polymer Solutions Segment
Overview— Segment results were affected by impairment charges recognized in 2024 and 2025. EBITDA improved due to transformational programs included in our stepping up performance and culture strategy.
The following table sets forth selected financial information for the APS segment.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
EBITDA
Revenues —Revenues decreased in 2025 by $162 million, or 4%, compared to 2024. Lower sales volumes resulted in a 4% decrease in revenue stemming from weaker automotive demand. Lower average sales prices resulted in a 2% decrease in revenue. Favorable foreign exchange impacts resulted in a revenue increase of 2%.
EBITDA —EBITDA decreased in 2025 by $705 million, compared to 2024. During 2025, we recognized $782 million of non-cash impairment charges related to a prolongeddownturn in, and outlook for, the global automotive industry. During 2024, unfavorable market conditions resulted in the loss of customers in our APS specialty powders business unit, resulting in a non-cash impairment charge of $55 million related to property, plant and equipment. See Note 9 to our Consolidated Financial Statements for additional information related to our impairments. The remaining change was primarily related to margin improvements primarily as a result of lower fixed costs driven by our transformation programs including portfolio optimizations including actions taken as a part of our cash improvement plan.
Technology Segment
Overview —Our Technology segment recognizes revenues related to the sale of polyolefin catalysts and the licensing of chemical and polyolefin process technologies. These revenues are offset in part by the costs incurred in the production of catalysts, licensing and services activities and research and development (“R&D”) activities. In 2025 and 2024, our Technology segment incurred approximately 60% and 55% of all R&D costs, respectively.
EBITDA decreased in 2025 compared to 2024 due to lower licensing results and lower catalyst margins as the planned pace of global polyolefin capacity additions moderated from lower demand for polyolefin products.
The following table sets forth selected financial information for the Technology segment.
Year Ended December 31,
Millions of dollars
Sales and other operating revenues
EBITDA
Revenues —Revenues decreased by $122 million, or 18%, in 2025 compared to 2024. Lower licensing revenues resulting from recognition of revenue on fewer contracts drove a 16% decrease in revenue. Lower catalyst prices drove a 3% decrease in revenues. Lower catalyst volumes resulting from lower demand drove a 3% decrease in revenues. Favorable foreign exchange impact resulted in a 4% increase in revenues.
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EBITDA —EBITDA in 2025 decreased by $199 million, or 53%, compared to 2024. Licensing results led to a 31% decrease in EBITDA resulting from fewer contracts with lower average values reaching significant milestones. Lower catalyst margins resulted in a 20% decrease in EBITDA as a result of lower production levels.
FINANCIAL CONDITION
The following table summarizes operating, investing and financing cash flow activities:
Year Ended December 31,
Millions of dollars
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating Activities —Cash provided by operating activities of $2,262 million in 2025 primarily reflected net loss adjusted for non-cash items, $393 million of tax payments which includes $235 million in U.S. Federal corporate income tax payments deferred from 2024 into 2025 under Hurricane Beryl disaster relief, and cash activities primarily related to Accounts receivable, Inventories, and Accounts payable.
Decreased Accounts receivable of $687 million was driven by lower average sales prices and volumes resulting from weak market conditions in our O&P-Americas, O&P-EAI, and I&D segments. Decreased Accounts payable of $768 million was primarily driven by lower production volumes from lower operating rates and decreased raw material costs in our O&P-EAI segment coupled with timing of payments. These changes also reflect our efforts to address ongoing macroeconomic volatility and strengthen financial results through our cash improvement plan. The decrease of $945 million in Inventories was primarily driven by our cash improvement plan actions.
Cash provided by operating activities of $3,819 million in 2024 primarily reflected earnings adjusted for non-cash items and cash activities primarily related to Accounts receivable, Inventories, and Accounts payable. Decreased Accounts receivable of $127 million was primarily driven by lower average sales prices coupled with timing of sales and customer payments. The decrease of $25 million in Inventories was primarily driven by higher sales volumes, slightly offset by inventory build in anticipation of turnarounds in the first quarter of 2025. Decreased Accounts payable of $122 million was driven by decreased raw material costs, partially offset by timing of payments.
Investing Activities —Capital expenditures in 2025 totaled $1,878 million compared to $1,839 million in 2024, of which approximately 65% and 75%, respectively, support sustaining maintenance such as turnaround activities at several sites as well as other plant health, safety and environmental projects. The remaining expenditures support profit-generating growth projects. See Note 22 to the Consolidated Financial Statements for additional information regarding capital spending by segment.
In 2025, we received proceeds of $67 million upon the sale of excess European emission credits. In 2024, we sold our EO&D business for $689 million and invested approximately $500 million to acquire a 35% stake in the National Petrochemical Industrial Company joint venture. See Notes 10 and 22 to the Consolidated Financial Statements for additional information.
In 2025, foreign currency contracts with an aggregate notional value of €750 million expired. Upon settlement of these foreign currency contracts, we paid €750 million ($877 million at the expiry spot rate) to our counterparties and received $843 million from our counterparties. Additionally, in 2025 we received $59 million upon termination and cash settlement of our cross-currency interest rate swaps, designated as net investment hedges, maturing in 2025 and 2030.
In 2024, foreign currency contracts with an aggregate notional value of €850 million expired. Upon settlement of these foreign currency contracts, we paid €850 million ($921 million at the expiry spot rate) to our counterparties and received $967 million from our counterparties.
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Financing Activities —We made dividend payments totaling $1,764 million and $1,720 million, in 2025 and 2024, respectively. Additionally, in 2025 and 2024, we made payments of $201 million and $195 million to repurchase outstanding ordinary shares, respectively. For additional information related to our share repurchases and dividend payments, see Note 20 to the Consolidated Financial Statements.
In 2025, we issued $500 million of 5.125% guaranteed notes due 2031 and $1,000 million of 5.875% guaranteed notes due 2036. Combined net proceeds from the sale of the notes are expected to be used for general corporate purposes, which may include the repayment of the outstanding principal on our guaranteed notes due 2026 and 2027.
In 2025, we issued $500 million of 6.150% guaranteed notes due 2035. Net proceeds from the sale of the notes were used for general corporate purposes, including the repayment of $492 million remaining of outstanding principal of our 1.25% guaranteed notes due 2025.
In 2024, we issued $750 million of 5.5% guaranteed notes due 2034. Additionally, we repaid the $775 million remaining of outstanding principal on our 5.75% senior notes due 2024.
For additional detail regarding these debt transactions see Note 13 to the Consolidated Financial Statements.
In 2024, foreign currency contracts with an aggregate notional value of €784 million expired. Upon settlement of these foreign currency contracts, which were designated as cash flow hedges, we paid €784 million ($835 million at the expiry spot rate) to our counterparties and received $849 million from our counterparties.
For additional information related to our swaps and currency contracts, see Note 15 to the Consolidated Financial Statements.
Liquidity and Capital Resources
Overview
We plan to fund our working capital, capital expenditures, debt service, dividends and other cash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control.
Debt repayment, and the purchase of shares under our share repurchase authorization, may be funded from cash and cash equivalents, cash from short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof.
As part of our overall capital allocation strategy, we plan to provide returns to shareholders in the form of dividends and share repurchases. Over the long-term, we are targeting shareholder returns of 70% of free cash flow, defined as net cash provided by operating activities less capital expenditures; however, our returns may vary in the event of significant or unforeseen changes in business circumstances, mergers or acquisitions, or the continuation of the current downturn. We intend to continue to declare and pay quarterly dividends, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends is balanced with our commitment to maintain an investment grade balance sheet as part of our capital allocation strategy and there can be no assurance that any dividends or distributions will be declared or paid in the future.
In February 2026, we declared a quarterly dividend of $0.69 per share, representing a $0.68 per share reduction from our fourth quarter 2025 dividend. The dividend will be paid to shareholders on March 9, 2026, with an ex-dividend and record date of March 2, 2026.
Cash Improvement Plan
In April 2025, to address ongoing macroeconomic volatility, we announced a cash improvement plan. The plan targeted a $600 million run-rate in annualized savings for 2025 relative to our 2025 internal plan. The cash improvement plan included three initiatives: (1) deferral of capital spending; (2) net reduction in Accounts receivable, Inventory and Accounts payable; and (3) fixed cost reductions. As of the end of 2025, the cash improvement plan achieved $800 million in annualized cash savings relative to our 2025 plan. For 2026, we expect to generate an additional $500 million of cash savings relative to 2025 actuals for a cumulative target of $1.3 billion. We will continue to prioritize capital spending on maintenance and certain
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growth projects. Fixed cost reductions may be achieved through contract changes, reductions in employees and employee-related expenses or other means. During 2025, we incurred $32 million in severance costs associated with the cash improvement plan.
Cash and Liquid Investments
As of December 31, 2025, we had Cash and cash equivalents totaling $3,443 million, which includes $678 million in jurisdictions outside of the U.S., primarily held within the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.
Credit Arrangements
At December 31, 2025, we had total debt, including current maturities, of $12,938 million. Additionally, we had $169 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.
We had total unused availability under our credit facilities of $4,650 million at December 31, 2025, which included the following:
• $3,750 million under our $3,750 million Senior Revolving Credit Facility. This facility backs our $2,500 million commercial paper program. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. At December 31, 2025, we had no outstanding commercial paper and no borrowings or letters of credit outstanding under this facility; and
• $900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At December 31, 2025, we had no borrowings or letters of credit outstanding under this facility.
In 2025, we amended the Senior Revolving Credit Facility primarily to increase the maximum leverage ratio (as defined in the Credit Agreement) through 2027 unless we elect to terminate such provisions sooner. Included in the amendment are certain limitations, including restrictions on dividend increases, if our leverage ratio is greater than or equal to 4.00 to 1.00, and share repurchases except to offset dilution. Additionally, the modification to the maximum leverage ratio was incorporated into the U.S. Receivables Facility. See Note 13 to the Consolidated Financial Statements for additional details.
At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.
In accordance with our current interest rate risk management strategy and subject to management’s evaluation of market conditions and the availability of favorable interest rates among other factors, we may from time to time enter into interest rate swap agreements to economically convert a portion of our fixed rate debt to variable rate debt or convert a portion of our variable rate debt to fixed rate debt.
Share Repurchases
In May 2025, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 23, 2026, which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. In 2025, we purchased approximately 3.0 million shares under our share repurchase authorization for $201 million.
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The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased. As of February 18, 2026, we had approximately 34.0 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. In September 2025, we amended our Senior Revolving Credit Facility which now restricts share repurchases, except to offset dilution. For additional information related to our share repurchase authorizations, see Note 20 to the Consolidated Financial Statements.
Capital Budget
In 2026, we are planning to invest approximately $1.2 billion in capital expenditures. Approximately $800 million of the 2026 budget is planned for sustaining maintenance, with the remaining budget supporting profit-generating growth projects. Our capital spending plans are aligned with our strategic pillars. However, while we continue to invest in MoReTec -1 as planned, we are delaying construction to expand our propylene production capacity at our Channelview Complex (Flex-2) and delaying other capital projects to preserve capital during the cycle downturn.
Cash Requirements from Contractual and Other Obligations
As part of our ongoing operations, we enter into contractual arrangements that may require us to make future cash payments under certain circumstances. Our cash requirements related to contractual and other obligations primarily consist of purchase obligations, principal and interest payments on outstanding debt, lease payments, pension and other post-retirement benefits and income taxes. For more information regarding our debt arrangements, lease obligations, pension and other post-retirement benefits and income taxes, see Notes 13, 14, 16 and 18 to the Consolidated Financial Statements, respectively.
We are party to obligations to purchase raw material s, utilities and industrial gases which are designed to ensure sources of supply and are not expected to be in excess of normal requirements. These purchase arrangements include provisions which state minimum purchase quantities or fixed-fees; however, in the event we do not take the contractual minimum volumes, we are obligated to compensate the vendor only for any resulting economic losses they suffer. No material fees were paid to vendors for such losses in 2025. Assuming that contractual minimum volumes are purchased at contract prices as of December 31, 2025, these commitments represent approximately 20% of our annual Cost of sales with a weighted average remaining term of 6 years.
We also have purchase obligations under take-or-pay agreements which require us to either buy and take delivery of a minimum quantity of goods or to pay for any shortfall. These arrangements largely relate to product off-take agreements with a joint venture located in Poland . No material shortfall was paid for quantities not taken under these contracts in 2025. When valued using a contract price as of December 31, 2025, these commitments represent approximately 5% of our annual Cost of sales with a weighted average remaining term of 14 years.
In connection with the agreement for the sale of select European olefins & polyolefins assets and the associated business, we anticipate making a cash contribution of approximately $300 million to the sold businesses prior to closing in the second quarter of 2026. Other costs, including selling expenses, separation costs, and employee-related costs, are estimated to range from approximately $100 million to $150 million and are expected to be incurred primarily prior to closing. See Note 4 to our Consolidated Financial Statements for additional information.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We apply accounting policies that best reflect the underlying business and economic events, consistent with U.S. GAAP. Inherent in such policies are certain key assumptions and estimates which are updated periodically. We believe the following accounting policies and estimates, and the judgments and uncertainties affecting them, are critical in understanding our reported operating results and financial condition.
Inventories —We account for our raw materials, work-in-progress and finished goods inventories using the LIFO method of accounting. The cost of raw materials, which represents a substantial portion of our operating expenses, and energy costs generally follow price trends for crude oil and natural gas which are subject to many factors, including changes in economic conditions.
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Since our inventory consists of manufactured products derived from crude oil, natural gas, natural gas liquids and correlated materials, as well as the associated feedstocks and intermediate chemicals, our inventory market values are generally influenced by changes in the benchmark of crude oil and heavy liquid values and prices for manufactured finished goods. The degree of influence of a particular benchmark may vary from period to period, as the composition of the dollar-value LIFO pools change. An actual valuation of inventory under the LIFO method is performed at the end of each year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimate of expected inventory levels and costs at the end of the year.
LIFO value is measured at the total pool level. The impact of the measurement of each LIFO pool at the lower of cost or market value (“LCM”) is a function of the current market prices and the composition, or product mix, of inventory within the pool at the balance sheet date. Due to the compositions of our LIFO pools, changes in market prices of the materials within the pool from period-to-period do not necessarily correlate with LCM charges. An LCM condition may arise due to a volumetric or price decline in a particular material that had previously provided a positive impact within a pool.
As of December 31, 2025, three of our nine LIFO inventory pools, with a combined carrying value of $1.6 billion, were valued close to their respective market values. If there is a sustained decline in market prices in subsequent periods, we may recognize a LCM inventory valuation charge to reduce the carrying value of these pools to their respective market value. The extent of any future adjustment will depend on pool‑specific commodity pricing trends and changes in the composition of each dollar‑value LIFO pool at the balance sheet date. Given the inherent volatility in market pricing we cannot predict the extent of any such charge. Lower of cost or market charges recognized during an interim period can be reversed, partially or fully, in subsequent interim periods of the same fiscal year if market pricing recovers prior to the earlier of the inventory being sold and the end of the same fiscal year. Accordingly, our cost of sales and results of operations may be affected by such fluctuations.
Long-Lived Assets Impairment Assessment —Long-lived assets are assessed for impairment whenever changes in facts and circumstances indicate that the carrying value of the assets may not be recoverable. The need to test for impairment can be based on several indicators, including a significant reduction in prices of or demand for products produced, a weakened outlook for profitability, a significant reduction in margins, an expectation that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, other changes to contracts or changes in the regulatory environment. For purposes of impairment evaluation, long-lived assets, including finite-lived intangible assets, must be grouped at the lowest level for which independent cash flows can be identified. If the sum of the undiscounted estimated pre-tax cash flows is less than the carrying value of an asset group, fair value is calculated using an income approach or a market approach, and the carrying value is written down to the calculated fair value.
Significant judgment is involved in developing estimates of fair value, as the results may be based on assumptions that are not readily observable, including projected operating results, economic conditions, expected cash flows, EBITDA growth rates, terminal values, and discount rates. The discount rates applied in cash flow models reflect considerations such as prevailing market and economic conditions, the risk profile of the projected cash flows, and the return expectations of market participants. Estimates used to determine fair value are consistent with those used in our financial planning and business performance reviews.
During the third quarter of 2025, a prolongeddownturn in, and outlook for, the European petrochemical and global automotive industries, particularly affected our O&P-EAI and APS segments, combined with the sustained decline in our market capitalization, constituted a triggering event requiring a quantitative interim impairment test of goodwill and long-lived assets within these segments. As a result we recognized non-cash impairment charges of $111 million related to intangible assets and $99 million related to property, plant and equipment in our APS segment. Additionally, during 2025, we recognized impairment charges of $56 million related to property, plant and equipment in connection with European assets classified as held for sale in our O&P-EAI segment.
The impairments recognized in 2025 were determined utilizing a discounted cash flow method under the income approach. These impairments resulted in a full write-down of property, plant and equipment for the impacted asset groups. Intangible assets remaining within our APS segment after the recognition of impairment charges are immaterial. We believe that any reasonable variation, whether favorable or unfavorable, in a significant input would not have a material effect on Net income (loss). In addition, due to the complexity and interdependence of the assumptions underlying the impairment analysis, it is not practicable to quantify the effect of individual assumptions on Net income (loss).
See Note 9 to the Consolidated Financial Statements for additional information regarding impairment charges.
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Goodwill —Goodwill is tested for impairment annually in the fourth quarter, or whenever events or changes in circumstances indicate that the fair value of a reporting unit with goodwill may be less than its carrying amount. We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed for each of the reporting units include, but are not limited to, changes in long-term commodity prices, discount rates, competitive environments, planned capacity, cost factors such as raw material prices, and financial performance of the reporting units. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its fair value, a quantitative test is required. Under the quantitative impairment test, the fair value of each reporting unit, calculated using an income approach such as a discounted cash flow model, is compared to its carrying value, including goodwill. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, an impairment charge equal to the excess is recognized, up to a maximum amount of goodwill allocated to that reporting unit.
The process of valuing each reporting unit is inherently subjective, as valuation models require the application of significant estimates and the use of unobservable inputs, including projected operating results, economic conditions, expected cash flows, discount rates and other assumptions based on a market participant perspective. The discount rates applied in our cash flow models reflect considerations such as prevailing market and economic conditions, the risk profile of the projected cash flows, and the return expectations of market participants. While we believe our fair value estimates are reasonable, actual results may differ from those projections.
In the third quarter of 2025, we performed a quantitative impairment assessment of the reporting units within our O&P-EAI and APS segments, resulting in the recognition of non-cash impairment charges totaling $972 million. The impairments recognized in our O&P-EAI and APS segments resulted in a full write-down of goodwill for these segments. We believe that any reasonable variation, whether favorable or unfavorable, in a significant input would not have a material effect on Net income (loss). In addition, due to the complexity and interdependence of the assumptions underlying the impairment analysis, it is not practicable to quantify the effect of individual assumptions on Net income (loss). See Note 9 to the Consolidated Financial Statements for additional information.
As of December 31, 2025, we had goodwill of $708 million, primarily related to the acquisition of A. Schulman Inc. in 2018, as well as the tax effects of differences between the tax and book basis of our assets and liabilities, which resulted from the revaluation of those assets and liabilities to fair value in connection with the Company’s emergence from bankruptcy and the application of fresh-start accounting in 2010. In the fourth quarter of 2025, we performed a qualitative impairment assessment of our reporting units, which indicated that it was more likely than not that the fair value of our reporting units exceeded their carrying value, including goodwill. Accordingly, a quantitative goodwill impairment test was not required.
Equity Method Investments Impairment —Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment when there are indicators of a loss in value, such as a lack of sustained earnings capacity or a current fair value less than the investment’s carrying amount. When it is determined such a loss in value is other than temporary, an impairment charge is recognized for the difference between the investment’s carrying value and its estimated fair value. When determining whether a decline in value is other than temporary, we consider factors such as the duration and extent of the decline, the investee’s financial condition and near-term prospects, and our ability and intention to retain our investment for a period that will be sufficient to allow for any anticipated recovery in the value of the investment. Estimates of fair value of an investment is based on the income approach and/or market approach. For the income approach, the fair value is typically based on the present value of expected future cash flows using discount rates believed to be consistent with those used by principal market participants. For the market approach, since quoted market prices are usually not available, we utilize market multiples of revenue and earnings derived from comparable publicly traded industrial gases companies.
Long-Term Employee Benefit Costs —Our costs for long-term employee benefits, particularly pension and other post-retirement medical and life insurance benefits, are incurred over long periods of time and involve many uncertainties over those periods. The net periodic benefit cost attributable to current periods is based on several assumptions about such future uncertainties and is sensitive to changes in those assumptions. It is our responsibility, often with the assistance of independent experts, to select assumptions that, in our judgment, represent its best estimates of the future effects of those uncertainties and to review those assumptions periodically to reflect changes in economic or other factors.
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The current benefit service costs, as well as the existing liabilities, for pensions and other post-retirement benefits are measured on a discounted present value basis. The discount rate is a current rate, related to the rate at which the liabilities could be settled. Our assumed discount rate is based on yield information for high-quality corporate bonds with durations comparable to the expected cash settlement of our obligations. For the purpose of measuring the benefit obligations at December 31, 2025, we used a weighted average discount rate of 5.43% for the U.S. plans, which reflects the different terms of the related benefit obligations. The weighted average discount rate used to measure obligations for non-U.S. plans at December 31, 2025, was 4.37%, reflecting market interest rates. The discount rates in effect at December 31, 2025 will be used to measure net periodic benefit cost during 2026.
The benefit obligation and the net periodic benefit cost of other post-retirement medical benefits are also measured based on assumed rates of future increase in the per capita cost of covered health care benefits. As of December 31, 2025, the assumed rate of increase for our U.S. plans was 7.0%, decreasing to 4.5% in 2036 and thereafter.
The net periodic benefit cost of pension benefits included in expense is affected by the expected long-term rate of return on plan assets assumption. Investment returns that are recognized currently in net income represent the expected long-term rate of return on plan assets applied to a market-related value of plan assets, which is defined as the market value of assets. The expected rate of return on plan assets is a longer-term rate and is expected to change less frequently than the current assumed discount rate, reflecting long-term market expectations, rather than current fluctuations in market conditions.
The weighted average expected long-term rate of return on assets in our U.S. plans of 7.25% is based on the average level of earnings that our independent pension investment advisor advised could be expected to be earned over time. The weighted average expected long-term rate of return on assets in our non-U.S. plans of 3.44% is based on expectations and asset allocations that vary by region. The asset allocations are summarized in Note 16 to the Consolidated Financial Statements.
The actual rate of return on plan assets may differ from the expected rate due to the volatility normally experienced in capital markets. Our goal is to manage the investments over the long term to achieve optimal returns with an acceptable level of risk and volatility.
Net periodic pension cost recognized each year includes the expected asset earnings, rather than the actual earnings or loss. Along with other gains and losses, this unrecognized amount, to the extent it cumulatively exceeds 10% of the greater of the projected benefit obligation or the market related value of the plan assets for the respective plan, is recognized as additional net periodic benefit cost over the average remaining service period of the participants in each plan.
The following table reflects the sensitivity of the benefit obligations and the net periodic benefit costs of our pension plans to changes in the actuarial assumptions:
Effects on
Benefit Obligations
Effects on Net
Periodic Pension
Costs in 2026
Millions of dollars
Non-U.S.
Non-U.S.
Projected benefit obligations at December 31, 2025
Projected net periodic pension costs in 2026
Discount rate increases by 100 basis points
Discount rate decreases by 100 basis points
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The sensitivity of our post-retirement benefit plans obligations and net periodic benefit costs to changes in actuarial assumptions are reflected in the following table:
Effects on
Benefit Obligations
Effects on Net
Periodic Benefit
Costs in 2026
Millions of dollars
Non-U.S.
Non-U.S.
Projected benefit obligations at December 31, 2025
Projected net periodic benefit costs in 2026
Discount rate increases by 100 basis points
Discount rate decreases by 100 basis points
Additional information on the key assumptions underlying these benefit costs appears in Note 16 to the Consolidated Financial Statements.
Accruals for Taxes Based on Income —The determination of our provision for income taxes and the calculation of our tax benefits and liabilities is subject to our estimates and judgments due to the complexity of the tax laws and regulations in the tax jurisdictions in which we operate. Uncertainties exist with respect to interpretation of these complex laws and regulations.
Deferred tax assets and liabilities are determined based on temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
We recognize future tax benefits to the extent that the realization of these benefits is more likely than not. Our current provision for income taxes is impacted by the recognition and release of valuation allowances related to net deferred tax assets in certain jurisdictions. Further changes to these valuation allowances may impact our future provision for income taxes, which will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowance is eliminated.
We recognize the financial statement benefits with respect to an uncertain income tax position that we have taken or may take on an income tax return when we believe it is more likely than not that the position will be sustained with the tax authorities.
ACCOUNTING AND REPORTING CHANGES
For a discussion of the potential impact of new accounting pronouncements on our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.
CURRENT BUSINESS OUTLOOK
During the first quarter of 2026, we are managing continued volatility in feedstock and energy prices. In our O&P-Americas segment, tight year-end inventories , reduced supply and stronger seasonal demand are supportive for polyethylene price increase initiatives in the market. In O&P-EAI, typical seasonal trends should lead to improved demand. In our I&D segment, oxyfuel profitability is expected to normalize following a volatile 2025 with typical seasonal margin improvements toward the end of the first quarter.
We are aligning our first quarter of 2026 operating rates with global demand and plan to operate our O&P-Americas, O&P-EAI and I&D assets at approximately 85%, 75% and 85%, respectively.
RELATED PARTY TRANSACTIONS
We have related party transactions with our joint ventures. We believe that such transactions are affected on terms substantially no more or less favorable than those that would have been agreed upon by unrelated parties on an arm’s length basis. See Note 6 to the Consolidated Financial Statements for additional related party disclosures.
