US Westlake’s Q1 net income up 5.1% to $87.8m on higher sales

01 May 2012 12:00  [Source: ICIS news]

LONDON (ICIS)--Westlake Chemical’s net income for the first quarter of 2012 rose 5.1% year on year to $87.8m as sales increased 19% from the same period last year, the US polyethylene (PE) and polyvinyl chloride (PVC) producer said on Tuesday.

Sales for the three months ended 31 March increased $167.6m (€127.4m) to $1.03bn, largely driven by higher prices for all of the group’s olefins products and PVC resin, higher sales volumes for PVC resin, building products and caustic.

Income from operations was $145.6m for the first quarter of 2012 compared with $140.6m in the same period in 2011, benefiting primarily from higher vinyls integrated product margins, partially offset by lower olefins integrated product margins, the company said.

Earnings in the first quarter of 2011 were negatively impacted as the result of a fire at a third-party storage facility in Mont Belvieu, Texas, in the quarter, Westlake added.

Albert Chao, president and CEO, said: “Our first-quarter earnings benefited from a significant drop in ethane and energy costs, strong demand for our products and high operating rates.

“Due in large part to shale gas production in North America, our natural gas liquids based ethylene production continues to have a significant cost advantage over naphtha based ethylene production,” he added.

Income from operations for Westlake's olefins segment was $129.2m in the first quarter of 2012, a decrease of $16.1m compared with the $145.3m reported in the same period last year, mainly because of lower olefins integrated product margins. The lower margins were primarily the result of the negative impact of high cost feedstock in inventory at 31 December 31 2011, the company added.

Income from operations for the group’s vinyls segment was $21.1m, an improvement of $23.9m from a loss from operations of $2.8m in the first quarter of 2011, primarily driven by lower feedstock costs, higher sales prices for all of Westlake’s major products, and higher sales volumes for building products compared with the same period last year.

“The first quarter of 2012 income from operations [in Westlake's vinyls segment] was negatively impacted by the lost production and sales and the expensing of approximately $1.3m of costs associated with an unscheduled outage at our Geismar VCM [vinyl chloride monomer] unit [in Louisiana]. Further, we expect the Geismar outage to continue to negatively impact our Vinyls segment results in the second quarter of 2012,” Westlake said.

Looking ahead, Chao said: “We expect that our integration strategy and the continuing development of shale gas production, NGL [natural gas liquids] facilities and pipelines will give our olefins and vinyls businesses a strong competitive advantage for the foreseeable future."

($1 = €0.76)

By: Franco Capaldo
+44 (0)20 8652 3214

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