Westlake Chemical's first-quarter revenue and profit beat expectations

HOUSTON – Westlake Corporation (NYSE: WLK ) today reported strong results for the first quarter of 2024, with both earnings per share (EPS) and revenue exceeding analysts' expectations.

The company reported earnings of $1.34 per share, beating the consensus estimate of $1.04 by $0.30. Revenue for the quarter reached $2.98 billion, exceeding analysts' forecast of $2.93 billion.

Westlake's revenue fell from $3.36 billion compared with the same period last year, reflecting a challenging environment in the Performance and Essential Materials (PEM) segment due to soft global industrial and manufacturing activity. However, the Housing and Infrastructure Products (HIP) segment reported record first-quarter operating income of $210 million and an operating margin of 20%, highlighting strong demand in the housing end market.

Westlake's HIP EBITDA was US$264 million, an increase of 29% from the same period last year, and the first quarter EBITDA margin was a record 25%. Sales in the company's HIP segment increased 12% compared with the fourth quarter of 2023, driven by strong demand for pipes and fittings and siding and trim. Although average selling prices fell 2% from the previous quarter, cost-saving measures in the HIP segment helped achieve margin expansion.

PEM sales volume increased by 3% from the previous month, indicating that demand is gradually recovering and the average sales price is stable. However, the PEM segment's operating income declined significantly from the same period last year, from $403 million in the first quarter of 2023 to $22 million in the current quarter, mainly due to lower average selling prices of key products such as caustic soda and epoxy resin.

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Westlake President and CEO Albert Chao commented on the results: “Our first quarter 2024 results demonstrate the value of diversifying the businesses in our portfolio, as sales growth and margin expansion in the HIP business supported our overall earnings currently. , pricing and margins in our PEM segment remain challenged by weak global demand.

Going forward, Westlake expects the HIP segment to continue to grow, taking advantage of limited housing supply and favorable demographics that support housing demand. The company expects the PEM segment to be stable in the near term, limited by weak end-market demand and competition from low-priced Asian imports. Westlake is also committed to improving the profitability of its European operations and investing in plant reliability and efficiency.

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