16:26 PM | February 19, 2013 | Clay Boswell
Westlake Chemical reports fourth-quarter net income of $95.3 million, or $1.42/diluted share, up 260% and 255%, respectively, from the same year-ago quarter. Net sales for the quarter totaled $801.0 million, down 6.8% year-on-year (YOY) on lower volumes for feedstocks, polyethylene, and styrene. Higher prices for styrene and higher volumes for building products provided some offset. The results easily beat the consensus analyst estimate of $1.23/share.
Fourth-quarter income from operations totaled $156.2 million , up 207% YOY. Westlake attributes the strong result to "significantly lower feedstock costs, which resulted in higher integrated margins" for both the olefins and vinyls segments. Income from operations for the olefins segment was $143.2 million, up 89% million YOY on lower feedstock costs, says Westlake. The vinyls segment reports income from operations of $18.2 million, up $37.8 million from a $19.6 million loss in the fourth quarter of 2011 on lower feedstock costs and higher sales volumes for caustic and building products.
"We are pleased to report record annual and fourth-quarter earnings benefiting from lower feedstock costs," says Albert Chao, president and CEO. "Increased North American shale gas production resulted in lower ethane-based ethylene production costs in 2012. We believe North American shale gas production will continue to give our business a significant cost advantage over global naphtha-based ethylene producers for the foreseeable future. Westlake is investing to capture this advantageous ethane and natural-gas cost position with the expansion of our ethylene units and additions to our chlor-alkali capacity."
Westlake is currently adding 230–240 million lbs/year of ethylene capacity at its Lake Charles, LA, site, the start of a 2-phase expansion that will lift overall ethylene capacity at Lake Charles by 500 million lbs/year by 2015.
A 350,000-electrochemical unit/year expansion of chlor-alkali capacity at the company's Geismar, LA, vinyls complex is expected to start up in the second half of 2013.