The international manufacturer and supplier of petrochemicals reported fourth-quarter net income plunged to $123 million, or 95 cents a share, missing analysts' estimates of $1.65. This compares to $802 million in the same period the prior year. The company said the period's disparity is owed to a one-time, non-cash tax benefit of $591 million in 2017 thanks to a reduced U.S. corporate income tax rate under the new U.S. Tax Cuts and Jobs Act.
Revenue for the quarter was $2 billion, below expectations of $2.09 billion.
The company blamed the big fourth-quarter miss on lower sales prices for its products due to lower oil prices and global trade uncertainties that affected domestic and export prices. Westlake also said a 2018 higher effective tax rate negatively impacted the quarter.
The company also said fourth-quarter numbers were negatively affected by higher ethane costs, lower prices for polyethylene and PVC resin and higher fuel costs due to increases in natural gas prices. Higher polyethylene sales volume and higher caustic soda prices and volume offset the negatives. Operating income fell by $156 million to $207 million for the fourth quarter, compared to $363 million in the fourth quarter of 2017.
For the full year, the company said it had record annual sales of $8.6 billion and net income of $996 million, or $7.62 a share, with a record EBITDA of $2.1 billion. This is a decrease in net income of $308 million compared to 2017, on net sales of $8 billion.
The company blamed its worse performance in 2018 on the 2017 income tax benefit from the new tax law and higher ethane costs. However, the decreases were partially offset by higher sales prices and volumes for caustic soda, lower effective income tax rate, lower purchased ethylene costs, and a lower interest expense, among others.
Westlake stock has risen nearly 20% for the year, while the S&P 500 index has gaiend 10.6%.