A series of recent acquisitions and solid end-market growth led sales and profit to surge for Westlake Corp. in the second quarter.
Houston-based Westlake saw sales for the quarter grow 63 percent to almost $1.2 billion vs. the year-ago quarter. Quarterly profit jumped 64 percent to $858 million.
"Our record performance is a result of strong sales volumes across our portfolio of differentiated and specialized product offerings, paired with our market position as a global leader in chlorovinyls production continuing to drive the performance of our businesses," CEO and President Albert Chao said in a news release.
Sales for the quarter at Westlake's Performance & Essential Materials unit, including PVC and polyethylene resins, increased 44 percent to $3.1 billion, with operating income also up 44 percent to $965 million. Officials said the increases resulted from higher prices in chlorovinyls, higher margins for PE and a recently acquired epoxy business. The increases were partially offset by higher global fuel and power costs, higher ethane feedstock costs and lower PVC sales volumes, they added.
Westlake's Housing & Infrastructure Products unit, including construction products, had sales soar 93 percent to almost $1.4 billion for the quarter. Operating profit for the unit more than doubled to $236 million. Officials said the increases were the result of continued strength in construction and remodeling activity driving solid demand and higher prices, as well as the contributions of acquisitions completed in 2021. Gains were partially offset by higher raw material and production costs and supply chain constraints, they added.
In 2021, Westlake completed four acquisitions, three of which were in downstream products. The firm acquired Lasco Fittings Inc., a Brownsville, Tenn.-based manufacturer of injected molded PVC fittings; Dimex LLC, a maker of recycled compounds and outdoors consumer goods in Marietta, Ohio; and — in a massive $2.15 billion all-cash deal — the North American building products business of Australia's Boral Industries Inc.
Looking ahead, Chao said that Westlake "continues to believe in the structural strength of the housing, repair and remodeling markets … the market position for our Performance & Essential Materials remains on a solid footing."
He added that the firm's Housing & Infrastructure Products unit "is anchored by a strong presence in the repair and remodeling market, which we believe will remain strong even if new housing starts retreat from their recent highs as global interest rates rise."
"While we are mindful of geopolitical and economic factors which may affect our businesses, we remain confident in the fundamentals of our business and the markets in which we participate," Chao said.
On Wall Street, Westlake's per-share stock price was at $94.20 in late trading Aug. 2, down about 3 percent since the start of 2022.