HOUSTON - Westlake Corporation (NYSE: WLK) today reported a robust performance for the first quarter of 2024, surpassing analyst expectations for both earnings per share (EPS) and revenue.
The company announced an EPS of $1.34, which was $0.30 higher than the consensus estimate of $1.04. Revenue for the quarter reached $2.98 billion, exceeding the analyst projection of $2.93 billion.
In comparison to the same quarter last year, Westlake's revenue saw a decline from $3.36 billion, reflecting a challenging environment for the Performance and Essential Materials (PEM) segment due to weak global industrial and manufacturing activity. However, the Housing and Infrastructure Products (HIP) segment experienced a record first quarter with income from operations of $210 million and a 20% operating margin, underscoring robust demand in housing end markets.
Westlake's HIP EBITDA of $264 million represented a 29% increase year-over-year (YoY), with a record first quarter EBITDA margin of 25%. The company's HIP segment benefited from a 12% increase in sales volume from the fourth quarter of 2023, driven by strong demand for pipe & fittings and siding & trim. Despite a 2% decrease in average sales prices from the previous quarter, the HIP segment's cost savings initiatives helped achieve margin expansion.
PEM sales volume grew by 3% sequentially, indicating a gradual demand recovery with stable average sales prices. However, the PEM segment's income from operations was significantly lower YoY, dropping from $403 million in the first quarter of 2023 to $22 million in the current quarter, primarily due to lower average sales prices for major products such as caustic soda and epoxy resin.
Albert Chao, President and Chief Executive Officer of Westlake, commented on the results, "Our first quarter of 2024 results demonstrated the value of the diversity of the businesses in our portfolio as sales volume growth and margin expansion in our HIP segment supported our overall earnings at a time when pricing and margins in our PEM segment remain challenged by weak global demand."
Looking ahead, Westlake expects the growth in the HIP segment to continue, capitalizing on the limited supply of houses and favorable demographics supporting housing demand. The company anticipates stable near-term performance in the PEM segment, constrained by weak end market demand and competition from low-priced Asian imports. Westlake is also focused on improving the profitability of its European operations and investing in plant reliability and efficiency.
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