Westlake Chemical Corporation, a Houston-headquartered manufacturer and supplier of petrochemicals, polymers and fabricated products, reported a net loss of US$109.6 mln ($1.68 per diluted share), on sales of US$597.1 mln for the fourth quarter of 2008. This compares to fourth quarter of 2007 net income of US$18.8 mln ($0.29 per diluted share), on sales of US$850.6 mln. The Q4 results were negatively impacted by approximately US$168.0 mln (pre-tax) due to inventory losses and the expensing of unabsorbed fixed manufacturing costs related to a drop in operating rates. The global recession caused reduced demand, which in turn caused average industry prices for ethane and propane to fall over 50% in the fourth quarter of 2008, contributing to a fall in polyethylene and PVC resin prices by approximately 40% and 30%, respectively.
Westlake's Olefins segment posted a loss from operations of US$136.3 mln in Q4 2008 as compared to income from operations of US$25.6 mln reported in same period of previous year. The company's Vinyls segment recorded a loss from operations of US$27.9 mln for the quarter compared to a US$4.0 mln loss from operations reported in the fourth quarter of 2007.
For full year 2008 net loss stood at US$29.5 mln ($0.45 per diluted share), compared to net income of US$114.7 mln, ($1.76 per diluted share), for the year ended Dec 31, 2007. Net sales increased 15.7% to US$3,692.4 mln for the year ended December 31, 2008 from the US$3,192.2 mln reported for the year ended December 31, 2007. Full year net loss was due to dismal performance in the last year 2008. In addition to the sharp drop in prices in the fourth quarter of 2008, operating rates and production volumes were lower as a result of weakened demand. Other items that negatively impacted 2008 results were outages caused by Hurricanes Gustav and Ike, higher raw material, natural gas and electricity costs, lower PVC pipe sales volumes and margins, and a trading loss of US$9.4 mln in 2008 compared to a trading loss of US$1.0 mln in 2007.