MOSCOW (MRC) -- Westlake Chemical Corporation, the US plastics maker controlled by the billionaire Chao family, has reported net income for the quarter ended March 31, 2014 of USD158.0 million - a 28% increase year on year - on net sales of USD1,027.7 million, as per the company's report.
This represents an increase in net income of USD34.7 million compared to first quarter 2013 net income of USD123.3 million on net sales of USD864.6 million.
Net sales for the first quarter of 2014 increased by USD163.1 million compared to net sales for the first quarter of 2013, mainly attributable to higher sales volumes for polyethylene and ethylene, higher sales prices for most of our major products and sales contributed by the company's specialty PVC pipe business, which Westlake Chemical acquired in May 2013.
Income from operations was USD248.1 million for the first quarter of 2014 as compared to USD194.1 million for the first quarter of 2013. Income from operations for the first quarter of 2014 benefited primarily from higher olefins volumes and improved integrated product margins, as higher sales prices more than offset the increase in feedstock and energy costs as compared to the prior year period. The increase in first quarter 2014 income from operations was partially offset by the lost sales, lower production rates, unabsorbed fixed manufacturing costs and other costs associated with the planned maintenance turnaround of our Calvert City production facilities for the ethylene plant's feedstock conversion and expansion project and other planned maintenance activities.
Albert Chao, President and Chief Executive Officer, said "We are pleased to report a 28% increase in first quarter net income as compared to the first quarter of last year despite the negative impact on earnings related to elevated propane costs, severe winter weather and the Calvert City planned maintenance turnaround. We also successfully completed the Calvert City ethylene plant conversion to ethane feedstock and its expansion by 180 million pounds a year in capacity in early April which allows our Vinyls segment to capture the advantageous ethylene cost position our Olefins segment has been benefitting from over the past several years and that we expect will continue into the foreseeable future."
The Olefins segment reported income from operations of USD272.3 million in the first quarter of 2014, an increase of USD111.2 million compared to USD161.1 million reported in the first quarter of 2013. The increase was primarily due to higher olefins integrated product margins as compared to the prior year period, as the increase in sales prices outpaced increases in feedstock and energy costs. In addition, first quarter 2014 income from operations benefited from higher polyethylene and ethylene sales volumes and improved production rates for most of our major products. Income from operations in the first quarter of 2013 was negatively impacted as a result of the lost production, unabsorbed fixed manufacturing costs and other costs associated with the turnaround and expansion of the Lake Charles Petro 2 ethylene unit.
Income from operations for the first quarter of 2014 for the Olefins segment of USD272.3 million increased by USD25.0 million from the USD247.3 million reported in the fourth quarter of 2013. The increase in first quarter income from operations was primarily due to higher polyethylene sales prices and volumes, which were partially offset by higher ethane prices than in the fourth quarter of 2013.
The Vinyls segment reported an operating loss of USD21.1 million in the first quarter of 2014 compared to income from operations of USD43.7 million in the first quarter of 2013, a decrease of USD64.8 million. This decrease was primarily driven by the lost sales, lower production rates and the expensing of USD16.9 million related to unabsorbed fixed manufacturing costs and other costs associated with the planned maintenance turnaround of our Calvert City production facilities for the ethylene plant's feedstock conversion and expansion and other planned maintenance activities. In addition, the Vinyls segment's first quarter 2014 operating results were negatively impacted by the severe winter weather and significantly higher propane costs, as average industry prices for propane increased by 50.2% as compared to the prior year period.
The Vinyls segment reported an operating loss of USD21.1 million in the first quarter of 2014, a decrease of USD39.7 million compared to income from operations of USD18.6 million in the fourth quarter of 2013. The results for the first quarter of 2014 were negatively impacted by higher propane costs as compared to the fourth quarter of 2013 and the lost sales and costs associated with the planned maintenance turnaround of our Calvert City facilities.
As MRC informed before, Westlake Chemical Corp. has recently separated its ethylene assets into a tax-advantaged venture in which it plans to sell shares to the public. The master-limited partnership (MLP) includes three US ethylene plants and a 200-mile (322-km) ethylene pipeline.
Westlake Chemical Corporation is a manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, caustic, VCM, PVC resin and PVC building products including pipe and specialty components, windows and fence.
MRC