Westlake Corp (NYSE:WLK) reported fourth-quarter and full-year 2025 financial results that presented a complex picture, marked by significant one-time charges but also a core operational performance that notably exceeded analyst expectations on profitability. The market's initial reaction, with shares rising approximately 2.7% in pre-market trading, suggests investors are focusing on the underlying business trends rather than the headline losses driven by restructuring.
Earnings and Revenue Versus Estimates
The company's reported figures were heavily impacted by what it calls "Identified Items," primarily costs associated with shutting down several North American production facilities. When excluding these one-time charges, the core performance tells a different story.
- Earnings Per Share (EPS): Westlake reported a net loss of $544 million, or $4.22 per diluted share. However, excluding $511 million in Identified Items, the adjusted net loss was $33 million, or $0.25 per share. This result significantly beat the analyst consensus estimate, which had anticipated a much deeper adjusted loss of $1.44 per share.
- Revenue (Sales): Net sales for the quarter came in at $2.53 billion, falling short of the analyst estimate of $2.63 billion. This represents an 11% decline from the $2.84 billion reported in the fourth quarter of 2024, driven by a combination of lower sales volumes and lower average selling prices across the business.
The divergence between the revenue miss and the earnings beat indicates that the company's cost management and restructuring efforts are having a tangible effect on the bottom line, even in a softer demand environment.
Segment Performance and Strategic Actions
The earnings release highlighted a stark contrast between the company's two main divisions, with strategic shutdowns concentrated in one.
- Performance and Essential Materials (PEM): This segment, which produces chemicals like chlorine, polyethylene, and PVC, bore the brunt of the restructuring. It reported a GAAP operating loss of $717 million for the quarter, which included $495 million in shutdown-related expenses. On an adjusted basis, excluding these items, the segment's loss from operations was $222 million. The company stated its "PEM profitability improvement plan" is beginning to show benefits, with fourth-quarter EBITDA exceeding internal expectations.
- Housing and Infrastructure Products (HIP): This segment, which makes building products, remained profitable. It reported income from operations of $66 million, or $82 million when excluding $16 million in restructuring costs. The results were impacted by typical seasonal demand weakness and slower housing starts.
A major takeaway from the report is the scale of Westlake's footprint optimization. In Q4, the company shut down three chlorovinyls plants and one styrene facility in North America and accrued expenses for the previously-announced shutdown of its epoxy site in Pernis, Netherlands. The company also wrote off all $727 million of goodwill associated with its North American Chlorovinyls reporting unit for the full year.
Management Outlook and Analyst Estimates
CEO Jean-Marc Gilson framed 2026 as a year focused on execution, stating the priority is to achieve the PEM plan's targeted $600 million in EBITDA improvement. He did not expect macroeconomic conditions to be a tailwind, citing challenging global industrial activity, but expressed confidence in the internal plan and the company's position for an eventual demand recovery.
This internal target provides a benchmark against external forecasts. Analysts, looking ahead, currently estimate sales of $11.43 billion for the full year 2026. For the upcoming first quarter of 2026, the consensus estimates project sales of $2.77 billion and an EPS loss of $0.45.
Market Reaction and Financial Position
The pre-market share price increase of nearly 3% indicates a positive reception to the earnings details. Investors appear to be interpreting the large restructuring charges as painful but necessary medicine to improve future profitability, while rewarding the better-than-feared core operational results. The company ended the year with a solid liquidity position, holding $2.9 billion in cash and investments against total debt of $5.6 billion.
For a detailed history of Westlake's earnings, future estimates, and analyst projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor does it recommend any investment action. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
