Westlake reports $109.6m net loss in Q4 on falling demand

18 February 2009 12:26  [Source: ICIS news]

LONDON (ICIS news)--Westlake Chemical posted a net loss of $109.6m (€86.8m) in the fourth quarter, plummeting from a gain of $18.8m in the same period a year earlier as the global recession reduced demand for its products, the Houston-based company said on Wednesday.

Group sales dropped 30% to $597.1m, down from $850.6m in the year earlier period, the company said.

“[The loss] was primarily due to the impact on our inventories caused by the unprecedented drop in feedstock and product prices, which resulted in significant inventory losses, lower customer demand and the resulting reduction in operating rates,” said president and CEO Albert Chao.

Westlake said feedstock and product prices had declined as a result of the continued deterioration in the US and global economies, which began in the third quarter, resulting in significant customer inventory destocking in the fourth quarter.

The Olefins business segment reported a $136.3m loss from operations during the fourth quarter compared with a gain of $25.6m in the same period of 2007.

Due to the weakened demand for ethylene derivative products, Westlake idled one of its ethylene units in Lake Charles, Louisiana, in December 2008 and accelerated a regularly scheduled maintenance turnaround of the unit.

The company’s Vinyls segment posted an operating loss of $27.9m compared to a $4m loss in the year-earlier period.

“PVC resin and pipe prices were reduced largely as a result of sharply falling raw material costs, and sales volumes declined as customers anticipated lower prices and demand weakened,” Westlake said in its earnings statement.

Construction activity in the US continued to slow in the fourth quarter of 2008, as the challenging economic conditions continued and seasonal slowdowns decreased activity even further, it added.

The group reported a full year 2008 net loss of $29.5m, down from a gain of $114.7m in 2007. Sales increased 16% to $3.69bn.

($1 = €0.79)

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By: Mark Watts
+44 20 8652 3214

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