LyondellBasell Industries NV (LYB)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	2,084,000	3,104,000	4,836,000	7,545,000	2,228,000
Interest expense	US$ in thousands	481,000	477,000	287,000	519,000	526,000
Interest coverage		4.33	6.51	16.85	14.54	4.24

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,084,000K ÷ $481,000K
= 4.33

The interest coverage ratio is a key financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio is generally considered favorable as it suggests that the company is generating sufficient operating income to cover its interest expenses comfortably.

Analyzing the interest coverage ratio of LyondellBasell Industries NV over the past five years reveals the following trends:
1. As of December 31, 2020, the interest coverage ratio was 4.24, indicating that the company generated operating income 4.24 times higher than its interest expenses.
2. By December 31, 2021, the interest coverage ratio improved significantly to 14.54, signaling a strong improvement in the company's ability to cover its interest expenses.
3. The trend continued positively into December 31, 2022, with the interest coverage ratio further increasing to 16.85, reflecting continued strength in the company's ability to meet its interest obligations.
4. However, a slight decline was observed by December 31, 2023, with the interest coverage ratio falling to 6.51, suggesting a relative decrease in the company's ability to cover its interest expenses compared to the previous year.
5. The trend worsened by December 31, 2024, with the interest coverage ratio dropping further to 4.33, indicating a more significant decline in the company's ability to meet its interest obligations.

Overall, the fluctuating trend in LyondellBasell Industries NV's interest coverage ratio over the past five years shows both strengths and weaknesses in the company's ability to manage its interest expenses. It is essential for stakeholders to monitor this ratio closely to assess the company's financial health and debt servicing capacity.