Westlake Q4 olefins margins rise on low-cost feedstock

22 February 2011 18:53  [Source: ICIS news]

HOUSTON (ICIS)--Low-cost feedstock helped US-based Westlake increase margins for its olefins business, helping the company more than offset lower fourth-quarter earnings in its vinyls segment, company executives said on Tuesday.

Westlake’s chief financial officer Steve Bender cited strong, ongoing demand for polyethylene (PE), higher margins from olefins and domestic access to lower-cost ethane feedstocks as influencing factors for the performance of the company’s fourth quarter earnings.  

For its fourth quarter earnings, Westlake reported a net income of $84.1m, compared with a net income of $12.5m reported the same time in 2009.  

The 2009 results were affected by an unscheduled outage at Westlake’s Calvert City, Kentucky, facility and a turnaround at one of the company’s ethylene units in Lake Charles, Louisiana, according to the company.

In Westlake’s olefins sector, the company increased its income to $154.5m in the fourth quarter from $55.1m in the fourth quarter of 2009.

Westlake CEO and president Albert Chao said lower ethane feedstock costs ramped up polyolefin margins. The company also is performing well with specialised polyethylene products.

“These products continue to grow as a percentage of the olefins sales,” he said.

In the vinyls segment, Westlake reported a loss from operations of $12.4m in the fourth quarter, compared with a loss of $29.2m in the fourth quarter of 2009. 

Chao said the vinyls sector was unable to raise prices sufficiently to offset higher feedstock ethylene costs, but the company saw continued growth in PVC exports.  

“The US PVC industry has become globally competitive,” Chao said.

Exports made up more than 30% of Westlake’s PVC resin sales, compared with 20% of total sales in 2009, Chao said.

However, Westlake exports are less than the US industry average.

Westlake is on schedule to expand its chlor-alkali production facility in Geismar, Louisiana, which is set to be on stream by the second half of 2013, Chao said.

Shares for Westlake on the New York Stock Exchange were at $48.85, up about 6%.

 ($1 = €0.73)

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By: Ruth Liao
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