Low-Cost Feedstock Propels Westlake Chemicals' Third-Quarter 2013 Earnings

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Westlake Chemical Corporation (NYSE:WLK) (Houston, Texas), a manufacturer and supplier of petrochemicals, vinyls, polymers and building products, reported a third-quarter net income of $170.3 million, compared with $87 million in the third quarter of 2012. The majority of the increase was attributed to lower feedstock prices; however, higher sales volumes and prices also added to the growth.

"Westlake achieved record quarterly earnings largely due to strong demand for most of our major products and low feedstock costs, resulting from shale gas production," said Albert Chao, president and chief executive officer of Westlake, in a press release. "We believe North American shale gas production will continue to give our business a significant cost advantage for the foreseeable future. We continue to invest to capture this advantageous cost position with the planned start-up for our chlor-alkali unit in Geismar, Louisiana, before the end of this year, and the planned conversion to ethane feedstock and expansion of our ethylene and PVC capacity at our Calvert City, Kentucky, facility in 2014."

Industrial Info is tracking more than 40 projects owned by Westlake worth more than $1.2 billion. This includes the $400 million Geismar expansion, which will bring the estimated engine control unit (ECU) capacity to 625,000 ECUs. The expansion will be completed in 2014, and in a webcast on November 7, 2013, executives said that the expected startup costs are $5 million in the fourth quarter of 2014. The $150 million Calvert City facility expansion and conversion will increase production by converting oil-based feedstock to ethane, capitalizing on the profitability of ethane gas.

The Olefins segment benefited greatly from lower feedstock costs, enhanced by the completion of the expansion of the Lake Charles, Louisiana, ethylene complex in the first quarter of 2013, which increased production capacity. Higher integrated margins, lower feedstock costs, and higher polyethylene sales led to $237.2 million of income from operations in the segment. This is a 90.5% increase over the same period in 2012, despite an unplanned outage in a cracker at Lake Charles. The outage lasted 14 days and cost approximately $21 million pre-tax.

In the Vinyls segment, the turnaround of a styrene plant in Lake Charles negatively impacted earnings; however, this was offset by the May 2013 acquisition of a PVC pipe business for $178.3 million, which brought in higher-than-average sales prices in the third quarter. Higher vinyls integrated margins produced higher sales volumes and improved operating rates. Income from operations in the segment was $39.6 million, a 64% growth over the third quarter of 2012.

"Westlake's third quarter results are reflective of earnings potential, which is driven by the ongoing low-cost feedstock environment and the ethylene expansion that we completed in Lake Charles in the first quarter of 2013," Chao said in a conference call webcast. "Looking forward, the fundamental factors that contributed to our success remain in place as growing natural gas liquid production from shale oil and gas drilling continues. Westlake remains well-positioned to benefit from the low-cost, gas-derived ethane versus the more expansive oil-derived naptha feedstocks."

For more information, visit Industrial Info's Chemical Processing Industry Database.

View Plant Profile - 1018077 1014865
View Project Report - 2006222 300031725 300126277

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.