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Westlake Chemical (WLK) Q4 Earnings and Sales Surpass Estimates

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Westlake Chemical Corporation (WLK - Free Report) posted profits of $113 million or 87 cents per share in the fourth quarter of 2020, up from a profit of $72 million or 56 cents per share in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of 68 cents.

Sales rose around 4% year over year to $1,965 million. The figure also surpassed the Zacks Consensus Estimate of $1,884 million.

The company benefited from increased sales prices and margins for polyethylene and polyvinyl chloride (PVC) resin and strong demand in downstream building products business in the quarter. These were partly offset by lost production and sales volumes, higher maintenance expense and other costs due to reduced production at its Lake Charles facilities from two hurricanes, increased ethylene and fuel costs, and reduced prices for caustic soda.

Westlake Chemical Corporation Price, Consensus and EPS Surprise

 

Westlake Chemical Corporation Price, Consensus and EPS Surprise

Westlake Chemical Corporation price-consensus-eps-surprise-chart | Westlake Chemical Corporation Quote

Segment Highlights

Sales in the Vinyls segment went up around 7% year over year to $1,590 million in the reported quarter. Operating income in the segment was $166 million, up around 144% year over year.  The results were driven by higher sales and margins for PVC resin and increased earnings in the downstream building products business.

The Olefins segment generated sales of $375 million, down roughly 6% year over year. Operating income in the segment dropped 55% to $22 million. The downside was mainly due to lower sales volumes and lost production as a result of the hurricanes.

FY20 Results

Earnings (as reported) for full-year 2020 were $2.56 per share, down from earnings of $3.25 per share a year ago. Revenues dropped roughly 8% year over year to $7,504 million for the full year.

Financial Position

Westlake Chemical ended 2020 with cash and cash equivalents of $1,313 million, up 80% year over year. Long-term debt was $3,566 million, up around 4% year over year.

Cash flow from operations was $1,297 million for 2020, essentially flat year over year.

Outlook

Westlake Chemical stated that it expects the strength in global demand in polyethylene and PVC along with the increase in housing starts and new building permits to continue this year. The company remains focused on operating its facilities safely and efficiently. It is also making disciplined investments, developing new products, lowering costs and leveraging its current products and footprint globally.

Price Performance

Shares of Westlake Chemical have rallied 45.9% in a year compared with the industry’s 49.4% rise.

 

 

 

Zacks Rank & Key Picks

Westlake Chemical currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and BHP Group (BHP - Free Report) .

Impala Platinum has an expected earnings growth rate of 195.9% for the current fiscal. The company’s shares have rallied around 70% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortescue has a projected earnings growth rate of 84.3% for the current fiscal. The company’s shares have surged around 179% in a year. It currently sports a Zacks Rank #2 (Buy).

BHP Group has a projected earnings growth rate of 65.6% for the current fiscal year. The company’s shares have shot up around 68% in a year. It currently carries a Zacks Rank #2.

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