Westlake Chemical Posts Positive Earnings
May 6, 2010
HOUSTON, TX -- Westlake Chemical Corp. has reported net income for the three months ended March 31, 2010 of $17.6 million, or $0.27 per diluted share, on sales of $778.3 million. This represents an improvement in net income of $23.7 million from the quarter ended March 31, 2009 net loss of $6.1 million, or $0.09 per diluted share, on sales of $488.3 million. Sales for the first quarter of 2010 increased $290.0 million compared to the first quarter of 2009 due primarily to higher sales prices and sales volumes for most major products driven by higher feedstock prices and rising demand. Income from operations was $34.4 million for the first quarter of 2010 as compared to a loss from operations of $0.9 million for the first quarter of 2009. Income from operations in the first quarter of 2010 as compared to the first quarter of 2009 benefited from improved production rates, a 20.2 percent increase in sales volume and higher olefins margins. These increases were partially offset by lower caustic margins and an unscheduled outage caused by freezing temperatures at one of the company's ethylene units in the first quarter of 2010. As a result of the outage, the company lost 21 days of ethylene production and expensed repairs and unabsorbed fixed manufacturing costs of $6.9 million. The first quarter of 2009 was negatively impacted by an unscheduled outage at the company's Calvert City facility and a turnaround at an ethylene unit in Lake Charles.
First-quarter 2010 earnings of $17.6 million, or $0.27 per diluted share, are an improvement over the $12.5 million, or $0.19 per diluted share, reported by the company in the fourth quarter of 2009. First-quarter 2010 sales of $778.3 million compare to sales of $630.0 million in the fourth quarter of 2009, an increase of $148.3 million. The increase in sales was largely due to higher sales prices for most major products and a 7.2 percent increase in sales volume. First-quarter 2010 sales volumes benefited from continued strength in domestic polyethylene markets and seasonal increases in PVC resin and pipe sales volumes. First quarter 2010 income from operations of $34.4 million was an increase of $11.4 million over the income from operations in the fourth quarter of 2009 of $23.0 million. The increase in income from operations as compared to the fourth quarter of 2009 was primarily due to higher sales volume and prices, which were partially offset by an increase in feedstock costs and the unscheduled outage at one of the ethylene units at the company’s Lake Charles facility.
Albert Chao, President and Chief Executive Officer, said, "We are pleased to report a significant improvement in earnings in the first quarter of 2010 as sales volume improved, and we were able to implement price increases for most of our products in order to offset the increases in feedstock costs. We continue to see low producer and converter polyethylene inventories and a tight ethylene supply, which has resulted in improved Olefins margins. Although construction markets remain challenged, the Vinyls segment experienced higher seasonal sales volumes and improved operating rates, but margins remain under pressure. We are optimistic that we will see moderate growth in the U.S. economy in 2010. We will continue our conservative fiscal management of the company while looking for opportunities to expand our business."