Westlake Chemical Corporation (WLK) has reported a 64.24 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $65.66 million, or $0.51 a share in the quarter, compared with $183.60 million, or $1.39 a share for the same period last year.
Revenue during the quarter grew 7.66 percent to $1,279.03 million from $1,188.04 million in the previous year period. Gross margin for the quarter contracted 1040 basis points over the previous year period to 15.80 percent. Total expenses were 96.36 percent of quarterly revenues, up from 78.62 percent for the same period last year. That has resulted in a contraction of 1774 basis points in operating margin to 3.64 percent.
Operating income for the quarter was $46.56 million, compared with $254.03 million in the previous year period.
"On August 31, 2016, we completed the strategic acquisition of Axiall Corporation, which is a significant milestone in a year that marks the 30th anniversary of our operations," said Albert Chao, president and chief executive officer. "The acquisition creates a new Westlake that is the third-largest global PVC producer and third-largest global chlor-alkali producer and remains the largest global specialty PVC producer and the largest LDPE producer in the Americas. We are focused on the integration of the organizations and continue to look for opportunities to better serve our customers with a more diversified portfolio that should create growth opportunities for the business and significant value for our stockholders."
Operating cash flow drops significantly
Westlake Chemical Corporation has generated cash of $544.16 million from operating activities during the nine month period, down 35.32 percent or $297.14 million, when compared with the last year period.
The company has spent $2,389.08 million cash to meet investing activities during the nine month period as against cash outgo of $553.59 million in the last year period.
Cash flow from financing activities was $1,560.50 million for the nine month period as against cash outgo of $203.12 million in the last year period.
Cash and cash equivalents stood at $380.52 million as on Sep. 30, 2016, down 60.44 percent or $581.41 million from $961.92 million on Sep. 30, 2015.
Working capital declines
Westlake Chemical Corporation has witnessed a decline in the working capital over the last year. It stood at $1,363.78 million as at Sep. 30, 2016, down 20.41 percent or $349.77 million from $1,713.54 million on Sep. 30, 2015. Current ratio was at 2.29 as on Sep. 30, 2016, down from 4.20 on Sep. 30, 2015.
Days sales outstanding went up to 60 days for the quarter compared with 43 days for the same period last year.
Days inventory outstanding has decreased to 32 days for the quarter compared with 48 days for the previous year period.
Debt increases substantially
Westlake Chemical Corporation has witnessed an increase in total debt over the last one year. It stood at $3,829.27 million as on Sep. 30, 2016, up 401.16 percent or $3,065.18 million from $764.09 million on Sep. 30, 2015. Westlake Chemical Corporation has witnessed an increase in long-term debt over the last one year. It stood at $3,829.27 million as on Sep. 30, 2016, up 401.16 percent or $3,065.18 million from $764.09 million on Sep. 30, 2015. Total debt was 35.14 percent of total assets as on Sep. 30, 2016, compared with 13.83 percent on Sep. 30, 2015. Debt to equity ratio was at 1 as on Sep. 30, 2016, up from 0.22 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 1.91 for the quarter from 30.94 for the same period last year.
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