Home / Knowledge / News / Textiles / Westlake generates $109.5 mn in cash flow from operating activities
Westlake generates $109.5 mn in cash flow from operating activities
18
Feb '09
Westlake Chemical Corporation reported a net loss of $109.6 million, or $1.68 per diluted share, on sales of $597.1 million for the fourth quarter of 2008. This compares to fourth quarter of 2007 net income of $18.8 million, or $0.29 per diluted share, on sales of $850.6 million.

The fourth quarter of 2008 gross profit was negatively impacted by approximately $168.0 million (pre-tax) due to inventory losses and the expensing of unabsorbed fixed manufacturing costs related to a drop in operating rates. The global recession caused reduced demand, which in turn caused average industry prices for ethane and propane to fall over 50% in the fourth quarter of 2008, contributing to a fall in polyethylene and PVC resin prices by approximately 40% and 30%, respectively.

As a result of utilizing the first in, first out (FIFO) method of inventory accounting and the rapid drop in feedstock costs and product prices in the fourth quarter of 2008, Westlake had high feedstock costs flowing through cost of sales in the fourth quarter of 2008, while the product sales prices were based on lower market sales prices due to the weakened demand for the products.

This resulted in the significant inventory losses, inclusive of transportation and other distribution costs, in the fourth quarter. The fourth quarter of 2008 selling, general and administrative expenses were higher than the prior year period, primarily due to a $8.9 million increase in the allowance for doubtful accounts, which was directly related to the current economic conditions.

The $109.6 million loss in the fourth quarter of 2008 was a decrease of $137.0 million, or $2.10 per diluted share, from the net income of $27.4 million in the third quarter of 2008. Net sales decreased by $476.6 million in the fourth quarter from the $1,073.7 million reported in the third quarter of 2008. The decrease in net income was primarily due to inventory losses and the expensing of unabsorbed fixed manufacturing costs resulting from sharp reductions in product prices, which were led by falling raw material costs and lower sales volumes due to weakened demand and customer destocking.

For the year ended December 31, 2008 net loss was $29.5 million, or $0.45 per diluted share, compared to net income of $114.7 million, or $1.76 per diluted share, for the year ended December 31, 2007. Net sales increased $500.2 million, or 15.7%, to $3,692.4 million for the year ended December 31, 2008 from the $3,192.2 million reported for the year ended December 31, 2007.

Loss from operations was $29.5 million for the year ended December 31, 2008 as compared to income from operations of $174.7 million for the year ended December 31, 2007. The increase in net sales was primarily due to higher sales prices for all of the major olefins and vinyls products, partially offset by lower sales volumes for polyethylene and PVC pipe.

The significant increase in product prices in the first nine months of 2008 was reversed in the fourth quarter as prices fell in response to lower demand and the sharp drop in feedstock costs. The 2008 net loss is the result of the $109.6 million net loss in the fourth quarter of 2008. In addition to the sharp drop in prices in the fourth quarter of 2008, operating rates and production volumes were lower as a result of weakened demand.

Must ReadView All

Textiles | On 22nd Feb 2017

Bangladesh exporters want duty-free access to US, Brazil

Garment and apparel exporters of Bangladesh are seeking duty-free...

Textiles | On 22nd Feb 2017

India to produce 341 lakh bales cotton in 2016-17: CAI

The Cotton Association of India (CAI) has maintained in its January...

Textiles | On 22nd Feb 2017

'India to be self-sufficient in silk production by 2020'

Indian could be self-sufficient in silk production by the year 2020...

Interviews View All

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Vasanth Kumar
Max Fashion India

‘Traditional high-street retailers are now willing to offer franchisees to ...

Siddharth Biyani
Mangalam Industries Pvt Ltd

‘The manufacturing sector is improving day-by-day, becoming better in...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
February 2017

February 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search