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Westlake Chemical's net income rises in Q2

06
Aug '12
Mr. Albert Chao
Westlake Chemical Corporation reported net income for the three months ended June 30, 2012 of $115.5 million, or $1.72 per diluted share, on sales of $914.0 million. This represents an increase in net income of $34.5 million, or $0.51 per diluted share, over the quarter ended June 30, 2011 net income of $81.0 million, or $1.21 per diluted share, on net sales of $925.0 million.

Net income in the second quarter of 2012 benefited by $8.5 million, or $0.13 per diluted share, as a result of a pre-tax gain of $16.0 million from the sale of Georgia Gulf securities offset by pre-tax expense of $3.0 million related to the Company's proposal to acquire Georgia Gulf Corporation, which was terminated. Sales for the second quarter of 2012 decreased by $11.0 million compared to the second quarter of 2011, primarily attributable to lower sales prices for most of the Company's major products and lower sales volume for PVC resin and building products, partially offset by higher olefins and feedstock sales volumes.

Income from operations increased to $171.0 million for the second quarter of 2012 as compared to $138.4 million for the second quarter of 2011, primarily driven by lower feedstock and energy costs, improved building products margins and higher caustic sales volume when compared to the same period in 2011.

Second quarter 2012 net income of $115.5 million, or $1.72 per diluted share, increased by $27.7 million from the $87.8 million, or $1.31 per diluted share, reported by the Company in the first quarter of 2012. Sales in the second quarter of 2012 were $914.0 million compared to sales of $1,034.9 million in the first quarter of 2012, a decrease of $120.9 million. The decrease in sales was largely the result of lower sales volumes for PVC resin and building products, and lower sales prices for polyethylene.

Second quarter 2012 income from operations of $171.0 million increased $25.4 million from the income from operations in the first quarter of 2012 of $145.6 million primarily due to higher integrated olefins margins as a result of lower feedstock costs.

Albert Chao, President and Chief Executive Officer, said, "We are pleased to report record earnings in the second quarter of 2012. Our Olefins and Vinyls segments both benefited from lower cost feedstocks in the second quarter, as ethane and propane decreased to their lowest prices in years as a result of ample supply made possible by shale gas production.

“Our Olefins segment reported record quarterly income from operations, and our Vinyls segment delivered solid improvement in results benefiting from the lower feedstock costs. We believe North American shale gas production will continue to give our business a significant cost advantage as a result of low cost energy and natural gas liquids based ethylene feedstock.

“Our integration strategy, which includes plans to expand our ethylene units and add chlor-alkali capacity, is designed to capture the benefit of this advantageous cost position."

Net income for the six months ended June 30, 2012 was $203.3 million, or $3.03 per diluted share, on net sales of $1,948.8 million. This represents an increase in net income of $38.7 million, or $0.57 per diluted share, from the six months ended June 30, 2011 net income of $164.6 million, or $2.46 per diluted share, on net sales of $1,792.3 million.

“Sales for the six months ended June 30, 2012 increased by $156.5 million compared to the prior year, primarily driven by higher olefins and feedstock sales volumes. Income from operations was $316.6 million for the six months ended June 30, 2012 as compared to $279.0 million for the six months ended June 30, 2011. The improvement in income from operations was primarily due to lower feedstock and energy costs and improved caustic and building products margins.


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