Westlake Chemical Corporation ( WLK Quick Quote WLK - Free Report) posted earnings of 11 cents per share for the second quarter of 2020, down from 92 cents per share it earned in the year-ago quarter. The Zacks Consensus Estimate for the quarter was a loss of a penny per share. The bottom line in the reported quarter was hurt by lower demand due to the impacts of the coronavirus pandemic and a sharp decline in oil prices. Lower demand and oil prices led to reduced global sales prices for the company’s major products as well as lower sales volumes for caustic soda and downstream vinyls products. Sales fell roughly 20% year over year to $1,709 million. The figure surpassed the Zacks Consensus Estimate of $1,653.8 million. Segment Highlights
Sales in the Olefins segment fell roughly 24% year over year to $361 million in the reported quarter. Operating income in the segment declined around 70% to $25 million. The decrease was mainly due to lower sales prices for polyethylene resulting from the pandemic and reduced oil prices, partly offset by increased polyethylene volumes and lower feedstock and fuel costs.
The Vinyls segment generated sales of $1,348 million, down around 19% year over year. Operating income in the segment was $20 million, down roughly 84% year over year. The decline was caused by the impacts coronavirus and lower oil prices. Financial Position
Westlake Chemical ended the quarter with cash and cash equivalents of $1,109 million, up nearly three fold year over year. Long-term debt was $3,745 million, up around 40% year over year.
Cash flow from operations was $448 million in the quarter, up 40% year over year. Outlook
Westlake Chemical said that it is well placed to continue to serve its customers’ needs while reducing operating costs, managing working capital and lowering capital expenditures. The company expects the prudent management of its business through the pandemic along with its strong business fundamentals to enable it to deliver long-term value to shareholders.
Shares of Westlake Chemical have lost 7.9% in a year compared with the
industry’s 18.2% decline.
Zacks Rank & Key Picks
Westlake Chemical currently carries a Zacks Rank #2 (Buy).
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