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Westlake reports a substantial increase in its operating income

05 Aug '08
5 min read

For the six months ended June 30, 2008, net income was $52.7 million, or $0.81 per diluted share, compared to $57.6 million net income, or $0.88 per diluted share for the six months ended June 30, 2007. Net sales increased $520.0 million, or 34.6%, to $2,021.5 million for the six months ended June 30, 2008 from the $1,501.5 million reported in the six months ended June 30, 2007. Income from operations was $87.4 million for the six months ended June 30, 2008 as compared to $94.9 million for the six months ended June 30, 2007.

The increase in sales was due to higher selling prices for all major products and higher sales volumes for ethylene and PVC resin. Income from operations for the first six months of 2008 was below income from operations reported in the first six months of 2007 due to, among other things, higher raw material, natural gas and electricity costs and a loss from trading activities.

Raw material costs for ethane and propane increased by more than 50% in the first half of 2008 as compared to the first half of 2007 and trading activity resulted in a loss of $6.9 million for the first half of 2008 as compared to a $4.8 million gain for the first half of 2007.

The first half of 2008 was negatively impacted by the turnaround and revamp of the styrene facility and the closure of the Pawling facility. The first half of 2007 was negatively impacted by a turnaround at one of the ethylene units in Lake Charles.

Albert Chao, President and Chief Executive Officer, said, "We are pleased to report a substantial increase in our operating income and earnings per share in the second quarter of 2008 as compared to our first quarter. Margins improved due to higher sales volumes for all of our major products and we are able to increase prices in order to partially offset the rise in feedstock costs which have reached unprecedented levels.

U.S. gas-based ethylene producers continue to maintain a cost advantage over oil-based ethylene producers. Global polyethylene prices remain strong with high naphtha costs and continue to provide U.S. producers with good export opportunities. We do, however, remain concerned with the high energy prices and the persisting housing crisis and the weakening effects they have had on the economy."

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Westlake Chemical Corporation

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