In the second quarter of 2020, Westlake’s net income was crashed by 87.4% year-on-year at USD1.71 billion as net sales slumped by 20.3%. Earnings, however, were still better than analysts’ estimates, at 11 cents/share.
As a result of coronavirus pandemic and the crushing oil prices, demand and prices of Westlake’s product dropped in the quarter.
Sales for vinyl went down by 19.1% year-on-year to USD1.35 billion while segment operating income was down 84.5%, to USD20 million. The fall was due to the lower sales volumes for caustic soda and downstream vinyl products.
Olefins segment sales fell 24.3% on a yearly basis to USD361 million and the segment operating income was down 69.5%, to USD25 million. Lower sales prices for polyethylene (PE) were partially offset by higher PE sales volumes combined with lower feedstock and fuel costs.
However, the lower ethane feedstock and fuel costs reduced operating and selling, general and administrative expenses, as well as lower costs associated with planned maintenance and in turn partially offset the lower prices and volumes.
The improvement was attributed to the higher earnings on ethylene sold to Westlake Chemical from Westlake Chemical OpCo LP (OpCo) and lower manufacturing and selling, general, and administration costs, albeit being partially offset by lower ethylene production.
