MOSCOW (MRC) -- Westlake Chemical Corporation saw lower profits in the third quarter of 2019, hurt by reduced sales prices for its major products, as per the company's press release.
The chemical maker posted a profit of USD158 million or USD1.22 per share for the quarter, down around 49% from USD308 million or USD2.35 it earned in the year-ago quarter. However, earnings topped the Zacks Consensus Estimate of USD1.02.
Sales fell roughly 8% year over year to USD2,066 million. The figure also missed the Zacks Consensus Estimate of USD2,131.4 million.
Lower global sales prices for key products due to trade uncertainties and a slower global economic growth were, in part, masked by reduced ethane feedstock and fuel costs.
Sales in the Olefins segment fell 17% year over year to USD448 million in the quarter. Operating income in the segment tumbled roughly 43% to USD92 million. The decline was mainly due to reduced sales prices for major products resulting from higher olefins production.
The Vinyls segment generated sales of USD1,618 million, down around 6% year over year. Operating income in the segment was USD153 million, down around 39% year over year. The decline was caused by reduced sales prices for caustic soda and PVC (polyvinyl chloride) resin.
Westlake Chemical ended the quarter with cash and cash equivalents of USD1,437 million, up around 82% year over year. Long-term debt was USD3,424 million, up 28% year over year.
Westlake Chemical noted that it is facing challenges from a difficult pricing environment due to slower global growth as a result of trade tensions. Amid this backdrop, the company remains focused on controlling costs and investing in a number of initiatives globally which it expects to boost long-term value for shareholders.
Shares of Westlake Chemical have lost 6.2% in a year’s time compared with the industry’s 15.9% decline.
In February 2018, as MRC informed before, Westlake Chemical announced plans to expand its capacities for the production of PVC and VCM at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.
According to MRC's ScanPlast report, Russia's overall PVC production reached 809,000 tonnes in the first ten months of 2019, up by 3% year on year. At the same time, not all Russian producers raised their output.
Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.
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