Westlake Corporation reported a profit of $285 million or $2.20 per share in Q3 2023, surpassing the Zacks Consensus Estimate of $1.92 per share. This robust performance was driven by resilient North American housing and infrastructure construction activities and increased operating rates, though it was tempered by lower average sales prices. Despite the profit, Westlake's sales decreased by 21.3% year over year to $3,115 million, falling short of the Zacks Consensus Estimate.
The Performance and Essential Materials (PEM) segment witnessed a significant 27.3% year-over-year decline in sales to $1,971 million due to lower integrated margins and average sales prices for products such as epoxy resins, PVC, and caustic soda. The operating income for this segment also experienced a drastic fall of 70.3% year over year to $105 million.
On the other hand, the Housing and Infrastructure Products segment reported an 8.1% drop in sales to $1,144 million but saw a substantial increase in operating income of 37.6%, amounting to $256 million.
Westlake generated net cash of $696 million from operating activities in Q3 2023 and had capital expenditures of $245 million. Looking forward to Q4 2023, the company anticipates a challenging environment due to high interest rates and inflation which could negatively impact product demand, leading to lower sales prices, particularly in the PEM category.
InvestingPro Insights
As we delve further into the financial health of Westlake Corporation, InvestingPro data provides valuable insights. With a Market Cap of 15.45B USD, the company has shown resilience despite market fluctuations. The P/E Ratio (Adjusted) as of Q2 2023 stands at 10.93, indicating a potentially undervalued stock. The Revenue Growth in Q2 2023 was -8.2%, reflecting the decline in sales mentioned in the article.
InvestingPro Tips further enlightens us on the company's performance. A noteworthy point is that Westlake has maintained its dividend payments for 20 consecutive years, providing a consistent return for its investors. This aligns with the strong earnings which should allow management to continue dividend payments. Additionally, the company's liquid assets exceed short-term obligations, suggesting a strong financial position.
For an in-depth analysis and additional tips, consider exploring the InvestingPro platform which offers over ten more tips for Westlake Corporation, aiding in a comprehensive understanding of the company's financial health.
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