LyondellBasell Industries is making changes to its Advanced Polymer Solutions unit, which includes North America's largest plastics compounding business.
LBI's Catalloy and polybutene specialty resins businesses were removed from APS and reintegrated into the firm's Olefins & Polyolefins unit on Jan. 1, officials with Houston-based LBI said on a Feb. 3 conference call with stock analysts.
APS Executive Vice President Torkel Rhenman said on the call that those moves "will allow the APS team to sharpen their focus on the compounding business, distinct from the polymer business of Catalloy and polybutene, which serves our O&P value chain."
"With increased autonomy and accountability, we are developing a more agile operating model," he added. "Our goal is to sharpen our focus on customer service and product development to maximize value for our customers and for LyondellBasell."
During a question and answer session on the call, CEO Peter Vanacker said that lower-than-expected earnings for the APS unit "are one of the reasons why we have repositioned this business."
"We are, of course, not happy at all with the results in the APS business," Vanacker said.
"There are lots of factors [such as] market demand and higher costs that we have seen last year … so we have decided to reposition this business and run it as a separate company within LyondellBasell," he added.
Michael McMurray, chief financial officer and executive vice president, added on the call that LBI "did well on the integration and cost reductions, but our APS business needs a much more customer-centric operating model."
"Our focused improvements in customer intimacy, technical support and service levels, I think, will really allow us to fix this business and grow it in a profitable way," he added.
For full-year 2022, APS posted sales of more than $5.2 billion, up almost 2 percent vs. 2021, but operating profit slumped almost 30 percent to $201 million. The unit's compounding sales volume in pounds was down 3 percent to a little more than 3.3 billion pounds. Based on sales, APS represented just over 10 percent of LBI's total for 2022.
LBI formed APS in early 2018 when it acquired A. Schulman Inc. — a global compounding leader based in Fairlawn, Ohio — for $2.25 billion and combined it with its own compounding business, which was one of North America's largest polypropylene compounders.
LBI is a major global supplier of polyethylene and PP resins. The firm posted sales of $50.5 billion in 2021.