Westlake Chemical Corporation reported net income of $37.9 million, or $0.58 per diluted share, for the second quarter of 2007. This represents a decrease from the second quarter of 2006 net income of $67.2 million, or $1.03 per diluted share. Sales for the second quarter of 2007 were $782.7 million and income from operations for the second quarter of 2007 was $62.3 million.
This compares with second quarter 2006 income from operations of $106.9 million on net sales of $669.3 million. The increase in sales is the result of higher polyethylene sales volumes which were attributable to the November 30, 2006 acquisition of Eastman Chemical's polyethylene business in Longview, Texas.
The decrease in income from operations was primarily the result of lower margins due to lower selling prices for polyethylene, PVC resin and PVC pipe and higher feedstock costs. The second quarter 2007 was also negatively impacted by a scheduled turnaround at one of the ethylene units in Lake Charles, Louisiana, which was down approximately 30 days beginning April 9th, 2007.
During the shutdown, the Company completed the tie-in portion of a previously announced project to upgrade the feedstock flexibility of the unit, which is also expected to reduce energy costs and provide additional ethylene capacity.
Second quarter 2007 results were favorably impacted by the utilization of the first-in, first-out (FIFO) inventory accounting method as compared with utilizing the last-in, first-out (LIFO) method used by some companies in the industry. This was due primarily to rising feedstock costs.
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