Executive Vice President and Chief Financial Officer at LyondellBasell Industries
Thank you, Ken, and good morning, everyone. Please turn to slide 8 and let me begin by highlighting our substantial cash generation during 2021. LyondellBasell delivered record cash from operations and free cash flow in 2021. Our team worked diligently to efficiently convert 82% of our EBITDA into cash for the year despite increased working capital needs to support higher prices. After accounting for sustaining capital investments, we achieved a 23% free operating cash flow yield relative to our market capitalization.
Let's continue with slide 9 and review the details of how we deployed all of this cash last year. During 2021, we paid dividends and repurchased shares to provide a total of $2 billion in returns for shareholders. In May, we increased our quarterly dividend by 8%. 2021 represents our 11th consecutive year of annual dividend growth. At the same time, we reduced our long-term debt by $4 billion and further bolstered our balance sheet by paying down $300 million of short-term commercial paper. Net interest expense increased to $510 million, higher than our guidance at the beginning of 2021, largely due to debt extinguishment costs. Our current portfolio supports our solid investment-grade balance sheet, and we do not see the need for additional debt reduction. We ended the year with $1.5 billion of cash and short-term investments and $5.4 billion of cash and available liquidity.
Now I'd like to provide an overview of the results for each of our segments on slide 10. As Ken mentioned, our business portfolio delivered $2 billion of EBITDA during the fourth quarter. Our results reflected strong demand for our products, offset by higher costs for feedstocks and energy, primarily in our O&P Europe, Asia, International, I&D, and APS segments. Let's begin the individual segment discussions on slide 11 with the performance of our Olefins and Polyolefins, Americas segment. Fourth quarter 2021 EBITDA was $1.3 billion, $306 million lower than the third quarter. Margins declined on lower pricing for both Olefins and Polyolefins. Olefin results decreased approximately $190 million compared to third quarter 2021 due to margin declines driven by lower ethylene and propylene prices. Although we operated our North American ethylene crackers at 97%, sales volumes remained relatively unchanged as we built inventory to support maintenance downtime planned for the first quarter. Combined polyolefin results were approximately $120 million lower than the third quarter, primarily due to a decrease in polyethylene and polypropylene spreads over monomer. Polyethylene, however, posted record volumes driven by strong demand and increased production from our Hyperzone facility in December. O&P Americas posted record EBITDA of $5.3 billion for the full year, $3.5 billion higher than 2020. Margins increased for both Olefins and Polyolefins as higher product prices outpaced higher cost. Demand for nondurable packaging and consumer goods remained strong and led to increased volumes for both ethylene and polyethylene. Based on increasing seasonal demand and tight industry supply due to higher industry cracker maintenance, we expect robust margins to continue into the first quarter.
Let's turn to slide 12 and review typical seasonal trends in the U.S. polyethylene market. After tight markets escalated prices over the first three quarters of 2021, declines in polyethylene contract prices during the fourth quarter of last year captured market attention. As illustrated by the green line on the chart, demand typically rises during the first quarter, stabilizes in the second quarter, and grows again during the second season of the third quarter. In the fourth quarter, orders for polymers slow due to holiday downtime and as market participants strive to minimize their year-end inventories. The blue line indicates that polyethylene pricing logically follows these seasonal demand trends. Simply put, lower fourth quarter prices are a common occurrence. In contrast, the industry usually sees a rebound in demand and pricing during the first quarter. Orders increase as customers resume full production. During February and March, export demand often improves following the Lunar New Year holiday. In 2022, industry consultants are forecasting planned maintenance for U.S. ethylene crackers will be 3 times higher than normal, with about 15% of U.S. capacity taking maintenance downtime. Similarly, about 10% of European ethylene capacity will be down for maintenance during the first half of 2022. Ethylene cracker outages often constrain downstream polyethylene production. In summary, the confluence of seasonal trends, industry downtime, and robust consumer demand should provide support for polyethylene pricing during the first quarter of 2022.
Now please turn to slide 13 to review the performance of our Olefins and Polyolefins, Europe, Asia and International segment. Higher cost and lower spreads reduced margins and volumes in our EAI markets, resulting in a fourth quarter EBITDA of $155 million, $319 million lower than the third quarter. Olefins results declined approximately $180 million as margins decreased driven by higher feedstock and energy cost, despite higher ethylene and propylene prices. We operate our crackers at a rate of 70% due to planned maintenance. Combined polyolefin results decreased approximately $100 million compared to the prior quarter. Lower seasonal demand drove declines in polyolefin price spreads relative to monomer cost and reduced volumes. Declining polyolefin spreads and higher energy costs also affected our joint venture equity income by about $15 million. Full-year EBITDA increased $923 million compared to 2020. Olefins margins declined due to higher feedstock costs, outpacing increased ethylene and propylene prices. Combined polyolefin results and our joint venture equity income increased by more than $815 million and $125 million, respectively, driven by higher margins with increases in polyolefin prices. In Europe, we expect typical seasonal improvements as we progress through the first half of the year.
Please turn to slide 14 as we take a look at our Intermediates and Derivatives segment. Fourth quarter EBITDA was $252 million, a decline of $96 million from the third quarter of 2021. Compressed margins for Oxyfuels & Related Products and last-in, first-out inventory valuation charges of about $95 million muted margin improvements in our propylene oxide and derivatives and intermediate chemical businesses. Fourth quarter propylene oxide and derivatives results remained relatively unchanged, with higher margins offset by lower volumes due to planned maintenance. Intermediate chemicals results increased about $65 million with the resumption of our acetyls production. Oxyfuels & Related Products results decreased approximately $85 million as margins declined due to higher butane feedstock costs. For the full year, strong demand and a tight market drove margin increases in most businesses, resulting in EBITDA of $1.4 billion, $535 million higher than 2020. Volumes declined due to reduced exports of our propylene oxide and derivative products. In the first quarter of 2022, we expect margins to improve for our Oxyfuels & Related Products business with lower butane feedstock costs. Our volumes are expected to increase during the first quarter, supported by continued strong demand for our propylene oxide and derivatives and acetyls products.
Now let's move forward and review the results of our Advanced Polymer Solutions segment on slide 15. Customer supply chain constraints and high raw material costs hindered results with fourth quarter EBITDA of $24 million, $97 million lower than the third quarter. The segment incurred last-in, first-out inventory valuation charges of about $55 million during the quarter. Results for the compounding and solutions businesses decreased due to margin declines driven by higher raw material costs. Volumes decreased with continued supply chain constraints in the automotive manufacturing market. Results for our advanced polymer businesses were relatively unchanged, with margin improvement offset by volume declines. Full-year EBITDA for the segment was $409 million, a $28 million increase over 2020. Compared to the prior period, results benefited from a $35 million reduction in integration cost. Margins increased with higher spreads and volumes, increased with higher building and construction demand for our advanced polymer businesses. We expect volumes to improve as automotive manufacturers begin to ramp up production, particularly for products from our compounding and solutions business.
Now let's turn to slide 16 and discuss the results of our Refining segment. Fourth quarter EBITDA was $150 million, a $109 million improvement compared to the third quarter of 2021. Results excluded a non-cash impairment charge of $624 million, reflecting our ongoing evaluation of strategic options. Results for the quarter benefited from approximately $50 million due to LIFO effects from reduced inventory volumes. Results for the fourth quarter were driven by an improvement in margins due to a better product mix and an increase in the Maya 2-1-1 benchmark crack spread to about $23.58 per barrel. We operated the refinery at near-full rates of nameplate capacity with an average crude throughput at 266,000 barrels per day. Full-year EBITDA increased $289 million compared to 2020, or breakeven for the year. Comparisons exclude impairments taken in the fourth quarter of 2021 and the third quarter of 2020. Approximately $45 million of LIFO changes benefited the segment for 2021. Refining margins improved with higher demand for gasoline and jet fuel, which drove the Maya 2-1-1 spread from a historically low point in 2020 at an average of $12.63 to $20.87 per barrel in 2021. Crude throughput improved to 231,000 barrels per day in response to higher market demand. Refining margins are expected to improve slightly, with crack spreads estimated to be about $25 per barrel. We plan to operate the refinery at more than 90% of nameplate crude capacity during the first quarter.
Please turn to slide 17 as we review the results of our Technology segment. All-time high levels of licensing revenue and catalyst volumes drove EBITDA to new records of $173 million for the fourth quarter and $514 million for the full year. Based on the timing of anticipated licensing milestones, we expect the first quarter Technology business profitability will be lower, similar to levels in the first quarter of 2021.
Before I turn the call over to Ken, let me address some of your annual modeling questions for 2022 on slide 18. We are planning to invest approximately $2.1 billion in capital expenditures during 2022. Approximately $0.9 billion is targeted toward profit-generating growth projects, with the balance supporting sustaining maintenance. The majority of our 2022 growth investment is associated with the construction of the PO/TBA plant in Houston. We have a fairly typical schedule of planned maintenance for 2022 with a total of three major cracker turnarounds. We will also have a couple of turnarounds in our I&D segment during the second quarter. Based on expected volumes and margins, we estimate that lost production associated with all of this maintenance downtime will impact 2022 EBITDA by approximately $265 million. While routine maintenance costs are expensed, maintenance costs arising from turnarounds of major production units are capitalized and included in our capital expenditure forecast. The U.S. cracker turnaround is scheduled for the La Porte, Texas site in the first quarter and expected to impact O&P, Americas quarterly EBITDA by approximately $125 million. The European cracker turnarounds will occur at our French cracker during the first and second quarters and our smaller cracker in Wesseling, Germany during the third and fourth quarters of 2022. The maintenance is expected to impact O&P, EAI quarterly EBITDA by approximately $25 million, $15 million, $10 million, and $10 million in the first through fourth quarters, respectively.
Plant maintenance at our butanediol facility in one of our two propylene oxide units located in Channelview, Texas is expected to impact second quarter EBITDA for our Intermediates and Derivatives segment by approximately $80 million. We expect 2022 net interest expense will be approximately $340 million after netting capitalized interest of about $95 million. 2022 book depreciation and amortization is forecasted to be approximately $1.3 billion. We plan to make regular pension contributions in 2022 totaling approximately $70 million with approximately $55 million of pension expense for the year. We currently expect our effective tax rate to be approximately 20% and our cash tax rate to be lower than our ETR.
With that, I'll turn the call back over to Ken. Ken?