Income from Olefins segment up, Westlake Chemical
Westlake Chemical Corporation reported net income for the three months ended March 31, 2011 of $83.5 million, or $1.25 per diluted share, on sales of $867.3 million. This represents an improvement from the quarter ended March 31, 2010 net income of $17.6 million, or $0.27 per diluted share, on sales of $778.3 million.
Sales for the first quarter of 2011 increased $89.0 million compared to the first quarter of 2010 primarily due to higher sales prices for all major products and higher caustic and PVC resin sales volumes, partially offset by lower building products sales volume. PVC resin sales volume benefited from a strong export market in the first quarter of 2011.
Income from operations was $140.6 million for the first quarter of 2011 as compared to $34.4 million for the first quarter of 2010. Income from operations benefited from improved product margins due primarily to a 14.1% increase in product prices, higher production rates, improved PVC resin sales volume and lower ethane costs. The first quarter of 2010 was negatively impacted by an unscheduled outage at one of our ethylene units in Lake Charles, Louisiana caused by freezing temperatures.
First quarter 2011 net income of $83.5 million, or $1.25 per diluted share, decreased slightly from the $84.1 million, or $1.26 per diluted share, reported by the Company in the fourth quarter of 2010. The reduction in net income was due to higher interest expense related to the issuance of $154.0 million of tax-exempt bonds in December 2010 and slightly higher provision for income taxes, partially offset by an increase in income from operations.
First quarter 2011 sales of $867.3 million increased $71.9 million compared to sales of $795.4 million in the fourth quarter of 2010. The increase in sales was largely due to higher sales prices for most major products and an increase in polyethylene, PVC resin and caustic sales volumes. First quarter 2011 income from operations of $140.6 million increased $3.5 million over the income from operations in the fourth quarter of 2010 of $137.1 million.
The increase in income from operations was primarily due to higher polyethylene, PVC resin and caustic sales volumes and higher sales prices for most major products in the first quarter of 2011. The increase was partially offset by higher feedstock costs and higher operating costs resulting from a reduction in our ethylene operating rates in Lake Charles due to a fire at a third party storage facility in Mont Belvieu, Texas in the first quarter of 2011. The fire caused an interruption in our normal feedstock supply chain resulting in reduced operating rates and the purchase of higher cost replacement feedstock.
Albert Chao, President and Chief Executive Officer, said, "We are pleased to report record quarterly income from operations for the first quarter of 2011. The Olefins segment continues to benefit from lower cost natural-gas based ethylene production, strong demand for polyethylene, high operating rates and our higher margin specialty polyethylene product mix. Vinyls segment margins benefited from strong export demand for PVC resin and rising caustic and PVC resin export prices.