US Westlake's Q4 net income up 79% to $171m on higher sales

20 February 2014 13:53  [Source: ICIS news]

LONDON (ICIS)--Westlake Chemical's Q4 net income rose by 79% year on year to $171m with sales up 19% to $952m on the back of higher prices for polyethylene (PE), styrene and polyvinyl chloride (PVC) resins, the company said on Thursday.

The Houston, Texas-based company said the 65% increase in income from operations at $257.6m was primarily due to higher PE and PVC resin sales prices as well as lower ethane costs, although these were partially offset by higher propane costs.

Earnings before interest, tax, depreciation and amortisation (EBITDA) stood in the fourth quarter at $302.7m, an increase of  58.5% compared to the same quarter in 2012, although it decreased Q3 EBITDA of $307m.

Both business segments at Westlake Chemical experienced growth in the fourth quarter, with the olefins segment registering a strong 73% rise in income from operations at $247.3m on the back of higher integrated olefins margins resulting from higher PE sales prices and lower feedstock costs.

The vinyls segment registered more modest growth in the fourth quarter, with income from operations increasing 2.2% to $18.6m. The company said the growth came from higher sales volumes for caustic and PVC resins.

However, the vinyls segment saw a sharp decrease from the registered third quarter income from operations at $39.6m, a decrease of 53% due to higher propane costs and seasonally lower sales volumes for PVC resin and building projects, the company said.

On an annual basis, Westlake Chemical 2013’s net income jumped from $385.6m in 2012 to $610.4m, an increase of 58%, while net sales experienced a more modest growth from $3.57bn to $3.76bn.

This increase of 5.3% was supported by higher sales prices for most products, with higher sales volumes for styrene, caustic and PVC resin and its specialty PVC pipe business (acquired in May 2013) contributing significantly.

EBITDA for the year 2013 stood at $1.19bn, up 44.7% from the figure recorded in 2012 ($772.8m).

By business segments, olefins registered 2013 income from operations at $833.2m, up 50.7% compared to 2012 on the back of lower feedstock costs.

The vinyls segment posted income from operations of $154.7m in 2013, up 80% from 2012, an increase driven by lower feedstock costs, higher sales volumes for PVC resin and higher operating rates.

"We continue to benefit from lower-cost, ethane-based ethylene production resulting from increased North American natural gas liquids production, which we expect to continue for the foreseeable future,” said Westlake Chemical’s CEO Albert Chao.

The company completed in the first quarter of 2013 the expansion of one of its ethylene units at the Lake Charles, Louisiana, and started-up its Geismar, Louisiana, chlor-alkali plant in the fourth quarter.

“The completion of these two projects and the planned conversion to ethane feedstock and expansion of our ethylene and PVC capacity at our Calvert City, Kentucky facility in the second quarter of 2014 are expected to improve the profitability of our Vinyls business,” added Chao.

By: Jonathan Lopez
+44 208 652 3214

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