Specialty chemicals company Westlake Chemical Corporation (WLK) has commenced its earlier announced expansion of the Petro 2 ethylene unit at its Lake Charles, La., complex. The expansion will be completed in conjunction with a planned maintenance of the unit.
The expansion is expected to boost ethane-based ethylene capacity by roughly 230 million to 240 million pounds a year. The Petro 2 ethylene unit is expected to be down for about 60 days for the completion of the ethane cracker expansion work.
Westlake is an international manufacturer and supplier of petrochemicals, polymers and building products. It competes with The Dow Chemical Company (DOW) among others.
Westlake released its third-quarter 2012 results in November 2012. Its adjusted earnings (excluding one-time items) of $1.47 per share topped the Zacks Consensus Estimate of $1.38. Profit, as reported, climbed nearly 28% year over year to $87 million or $1.30 per share.
Revenues, however, slipped 15% year over year to $821.2 million, missing the Zacks Consensus Estimate of $824 million. The decline was due to lower pricing for a number of key products along with lower sales volume for styrene, partly masked by improved polyethylene, ethylene, PVC resin and building products volumes.
Westlake’s Olefins and Vinyls segments saw higher profits on a year-over-year basis in the quarter, aided by lower feedstock (ethane and propane) costs. Ethane prices declined due to strong North American shale gas production. However, the Vinyls unit remain affected by soft domestic construction markets and budget constraints.
The company, in its third quarter call, said that it expects to complete the second ethane cracker expansion at Lake Charles in 2015.
Westlake currently holds a short-term (1 to 3 months) Zacks Rank #2 (Buy).
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