US Westlake Chemical’s Q1 profits hit by slump in crude prices

LONDON (ICIS)–Westlake Chemical Corporation’s first-quarter net income fell by 7.4% with operating profit also down by a similar amount as sales prices were impacted by falling crude values, the US producer said on Monday.

Net income decreased to $146.3m, or $1.10 per diluted share, from $158.0m in the same period of 2014, while operating income fell by 7.6% to $229.3m.

Westlake said operating income in the quarter had benefited from improved vinyls integrated product margins but this had been more than offset by lower olefins integrated product margins as a result of lower sales prices.

“Sales prices in the first quarter of 2015 were negatively impacted by the significant decline in crude oil prices,” the company said in a statement.

Net sales increased by 7.4% to $1.10bn however, mainly attributable to contributions from Vinnolit, the specialty PVC resins business which Westlake acquired in July 2014. This was partially offset though by lower sales prices for its major products, the company said.

“In spite of the lower product prices resulting from a 55% drop in crude oil prices from their 2014 peak, we are pleased with our first quarter results,” said president and CEO Albert Chao.

“Our Olefins segment continues to benefit from strong global demand for polyethylene and low-cost feedstocks that are a result of abundant supplies of North American natural gas and natural gas liquids.

“The planned expansion of our Olefins Petro 1 ethylene unit at our Lake Charles, Louisiana site, which will add 250 million pounds of ethylene capacity, is on schedule for completion in the first half of 2016.

“Additionally, our Vinyls segment results reflect the benefit of our recent investments, including our ethylene expansion and feedstock conversion from propane to ethane that we completed in 2014 at our Calvert City site, our new chlor-alkali unit that we started up in Geismar at the end of 2013, and our acquisition of Vinnolit.”