The core operating profit of US resin maker Westlake (Houston, Texas; www.westlake.com) fell by more than half, dragged down by soft economic conditions as well as the elevated level of unplanned outages at the Performance and Essential Materials (PEM) segment. 

The earnings-before-interest-tax-depreciation-and-amortisation (EBITDA) plunged to USD 690 mn (EUR 633 mn) from the year-earlier figure of USD 1.45 bn on revenues that dropped 27% to USD 3.2 bn. Volume growth in polyethylene and chlorine failed to offset the declines in PVC resin and caustic soda.

There was also an elevated level of unplanned outages, which impacted operating income and EBITDA by a negative USD 50 mn in the quarter. 

Related: Westlake posts record results with acquisitions, high prices providing impetus

At PEM – where the olefins, vinyl chemicals, PE, and epoxy businesses are bundled – revenues declined 31% to USD 2.1 bn on the back of soft macroeconomic conditions and production outages, particularly in PVC resin and caustic soda. EBITDA eased 63% to USD 435 mn.

PEM’s income from operations for the second quarter of 2023 of USD 215 mn decreased 78% year-on-year due to lower PE and PVC resin average selling prices and integrated margins, as well as lower operating rates and sales volumes, particularly for epoxy. These were only partially offset by higher caustic soda average selling prices and lower feedstock and energy costs. As a result, EBITDA margin decreased to 20% from 37%.

At the Housing and Infrastructure Products (HIP) segment, revenues dipped 19% to USD 1.11 bn. EBITDA eased 21% to USD 244 mn as sales volumes fell due to lower housing starts over the past year driven by higher mortgage rates. HIP is home to pipes/fittings, films, PE, and thermoplastic elastomer materials. 

HIP’s segment EBITDA margin of 22% in the second quarter of 2023 was in line with the second quarter of 2022 as lower raw material costs and sales mix shift to repair and remodel offset unabsorbed fixed costs and lower average selling prices.