Westlake Corporation

What they do

Westlake converts ethylene and chlor-alkali (chlorine and caustic soda) into vinyls, polyethylene and epoxy, and further integrates PVC downstream into residential building products, PVC pipe and fittings, and PVC compounds. The HIP segment includes Westlake Royal Building Products, Westlake Pipe & Fittings and Westlake Global Compounds. The PEM segment includes Westlake North American Chlorovinyls, Westlake European & Asian Chlorovinyls, Westlake Olefins and Polyethylene and Westlake Epoxy. It also holds interests in Westlake Chemical Partners LP and OpCo, from which it buys ethylene on a cost-plus basis.

Revenue drivers

• Performance and Essential Materials (PEM) — Commodity and downstream chlorovinyls, olefins/polyethylene and epoxy sold into packaging, automotive, coatings and construction markets; generated $2,019M of net sales in Q2 2026 versus $1,659M in Q1 2026.
• Housing and Infrastructure Products (HIP) — Residential building products, PVC pipe and fittings, and compounds; generated $1,252M of net sales in Q2 2026 versus $993M in Q1 2026, with sales volume up 6% year-over-year excluding the ACI acquisition.
• Ethylene supply via Westlake Chemical Partners/OpCo — OpCo sells Westlake 95% of the ethylene it produces on a cost-plus basis expected to generate a fixed margin of $0.10 per pound; Westlake retains a 77.2% limited partner interest in OpCo and consolidates Westlake Partners.
• Geographic and product expansion through acquisitions — The ACI/Perplastic compounding business (acquired January 2026 for about $92.4 million) added wire and cable specialty compounds, and the Wilhelmshaven, Germany PVC/VCM site (acquired June 2026 for about $109 million) adds 838 million pounds of PVC and 882 million pounds of VCM capacity annually.

Recent performance

Q2 2026 net sales were $3,271M with net income of $260M, or $2.01 per diluted share, and EBITDA of $679M. That compares with Q1 2026 net sales of $2,652M, a net loss of $169M (loss of $1.31 per share) and EBITDA of $150M, and with Q2 2025 net sales of $2,953M, a net loss of $142M (loss of $1.11 per share) and EBITDA of $210M. HIP segment income from operations was $212M in Q2 2026 versus $56M in Q1 2026 and $222M in Q2 2025, while PEM swung to $185M of income from operations from losses of $211M in Q1 2026 and $318M in Q2 2025. Full-year 2025 revenue was $11.17B with a net loss of $1.51B and diluted EPS of -$11.70, reflecting a $727M non-cash goodwill impairment in North American Chlorovinyls and $393M of charges from North American chlorovinyls and styrene plant closures.

Strategy

Management is executing a three-pillar profitability improvement plan it says is on track to deliver a $600 million operating income benefit. In the fourth quarter of 2025 it ceased operations at the Aberdeen, Mississippi PVC plant, the Lake Charles North VCM plant, one diaphragm chlor-alkali unit at Lake Charles South, and the Lake Charles styrene plant, expecting about $25 million of additional shutdown costs through 2027. It is expanding in chlorovinyls through the January 2026 ACI acquisition and the June 2026 Wilhelmshaven PVC/VCM acquisition, and it completed a 2025 expansion of chlorine, caustic soda and VCM capacity at Geismar, Louisiana. In November 2025 it issued $600 million of 5.550% senior notes due 2035 and $600 million of 6.375% senior notes due 2055, tendered for part of its 3.60% 2026 notes, then redeemed the remaining $496 million in May 2026 and replaced its $1.5 billion revolving credit facility in April 2026.

Risks

• Petrochemical cyclicality and price pressure — Westlake states that cyclicality in the petrochemical industry has in the past, and may in the future, result in reduced operating margins or operating losses, and that it sells most commodity products in highly competitive markets.
• Imports and trade practices — Its PEM business could suffer if commodity product exports by other countries significantly increase or are sold in global markets in violation of international fair trade laws.
• Feedstock, energy and logistics cost volatility — Operations depend on the availability and cost of raw materials, energy and utilities, and Westlake relies heavily on third-party transportation it cannot control.
• Middle East conflict and supply-chain disruption — A conflict involving the United States, Israel and Iran that began in February 2026 has caused volatility and supply constraints, with ongoing shipping disruptions and elevated logistics costs creating inflationary pressure even though Westlake has no Middle East operations and sources most energy and feedstock from North America.

Outlook

Management attributes the Q2 2026 improvement in PEM to leverage on improving global supply-demand fundamentals, partly from logistical disruptions in the Strait of Hormuz, plus 2025 footprint optimization, cost reduction and reliability actions. It expects the North American Chlorovinyls shutdown program to be completed in 2027 with about $25 million of additional costs. For HIP, management notes performance generally tracks U.S. Census Bureau building permits and housing starts and the NAHB Repair and Remodeling Index, and it cites slower North American residential activity and an undersupply of existing housing. The company says it is actively assessing Middle East conflict conditions and potential impacts on both segments.