- Company name
- Westlake
- Sector
- Chemicals & building products
- About
- Westlake makes chemicals, plastics and building products. Its Performance and Essential Materials (PEM) segment makes polyethylene, PVC resin and other chemicals in North America, Europe and Asia. Its Housing and Infrastructure Products (HIP) segment makes PVC pipe and fittings and other building products, mostly for North America. In Q2 2026, it bought a PVC and VCM production site in Wilhelmshaven, Germany, and on October 1, 2026, it bought a rolled steel metal panel business for its roofing products. Net sales were $3.0 billion in Q3 2026. Its headquarters are in Houston. Jean-Marc Gilson is President and CEO.
- Thesis
- The market prices Westlake for weak chemical prices and slow homebuilding. PEM had operating losses in Q2 2025 and in Q1 2026. Prices rose in Q2 2026 after the conflict with Iran disrupted supply through the Strait of Hormuz, and PEM EBITDA reached $416 million. In Q3 2026, PEM prices fell 8% from Q2, European energy costs rose, and PEM had an operating loss again, of $64 million, or $8 million without closure charges. PEM EBITDA without these charges was still $215 million, against $90 million a year earlier. HIP sales volume fell 6% from a year earlier because homebuilding slowed, and Westlake expects Q4 2026 HIP sales of $900 million to $1 billion with an EBITDA margin of about 13%. Chemical production in Europe faces weak demand, high energy costs and imports from Asia, and Westlake will close its Cologne PVC plant in Q1 2027. For the gap to close, three things must be true. The three-pillar profitability improvement plan must deliver its $600 million EBITDA benefit for 2026; it gave about $200 million in Q3 2026. PEM must return to operating profit as the price spike of Q2 2026 fades, with help from low-cost North American feedstock and energy. HIP must keep its pipe and fittings growth from infrastructure work while housing is slow. The Q4 2026 report in early 2027 and the 2027 results show whether the plan holds through a full year. Because chemical cycles are long, the gap will probably close only over several years. The main reason it may not close is a long period of global oversupply in PVC and polyethylene.
- Risks
- PEM earnings move with global prices of PVC, polyethylene and other chemicals. Prices rose after the Iran conflict in Q2 2026 and then fell 8% in Q3, when PEM had an operating loss again. Global oversupply can keep margins low for years.
HIP sells mostly into North American housing and infrastructure. Slow homebuilding and higher freight costs reduced HIP volumes and margins in Q3 2026, and Westlake expects a HIP EBITDA margin of about 13% in Q4 2026.
European chemical plants face high energy costs and imports from Asia. The Cologne closure costs about $200 million: $51 million in Q3 2026 and about $150 million more in later periods. More closures can follow.
Westlake paid $67 million in Q1 2026 to settle litigation with direct purchasers of PVC pipe and fittings. More legal claims can cause new charges.
- Balance sheet
- Cash: $2.0B
Debt: $5.1B
Net debt: $3.1B
Interest cover: 1.4×
Undrawn credit line: $1.5B
Debt due within 12 months: $0.0M
Last debt due: 2061
Westlake funds its business with senior notes and has a $1.5 billion revolving credit facility that expires in 2031. At September 30, 2026, total debt was $5.06 billion, with nothing due within 12 months. Fixed rate debt was $5.14 billion of principal, with notes that mature from 2029 to 2061. Cash and cash equivalents were $1.76 billion and available-for-sale securities were $207 million. Nothing was borrowed under the revolving credit facility. Interest cover is income from operations of $235 million divided by interest expense of $163 million for the first nine months of 2026, which include the operating loss of Q1 and $79 million of closure, restructuring and other costs. In Q3 2026, net cash from operations was $408 million and capital spending was $188 million, so free cash flow was $220 million. In the first nine months of 2026, Westlake paid $205 million of dividends and bought back $30 million of shares. The Cologne closure needs about $100 million of cash over several years.
As of Sep 30, 2026.
- Checkpoints
- Nov 4, 2026: Q3 2026 earnings: how far earnings fell. Failed. Watch: PEM EBITDA that stays positive and well above the levels of 2025 passes; a return to PEM losses fails. Outcome: PEM EBITDA without closure charges was $215 million, well above $90 million a year earlier, but PEM returned to an operating loss of $64 million, or $8 million without these charges.
Feb 4, 2027 (estimate): Q4 2026 earnings: PEM profit and the improvement plan. Pending. Watch: A PEM operating profit, HIP sales within the $900 million to $1 billion guidance and the full $600 million plan benefit for 2026 pass; another PEM operating loss or a missed plan target fails.
Q1 2027 (estimate): Cologne PVC plant closes. Pending. Watch: The plant closes in Q1 2027 within the expected charges of about $205 million passes; higher costs or a delay fail.
- Recent events
- Nov 4, 2026: Westlake reported Q3 2026 results. Net sales were $3.0 billion, net income was $6 million, or $0.05 per share, and EBITDA was $350 million. Without $58 million of closure and restructuring charges, EPS was $0.45 and EBITDA was $408 million, up from $313 million a year earlier but down from $679 million in Q2 2026. PEM EBITDA without these charges fell to $215 million from $416 million in Q2, and PEM had an operating loss. HIP EBITDA fell to $195 million. Free cash flow was $220 million. Westlake expects Q4 2026 HIP sales of $900 million to $1 billion with an EBITDA margin of about 13%.
Oct 1, 2026: Westlake Royal Roofing bought a rolled steel metal panel business for about $36 million.
Sep 29, 2026: Westlake said it will close its Cologne, Germany PVC plant, with about 165,000 metric tons of annual capacity, in Q1 2027. It expects pre-tax charges of about $205 million, of which about $100 million is cash. It also said that Q3 2026 results will be lower than Q2, because PVC and polyethylene prices fell and HIP had higher freight costs and lower volumes.
Aug 4, 2026: Westlake reported Q2 2026 results. Net sales were $3.3 billion, net income was $260 million, or $2.01 per share, and EBITDA was $679 million. PEM EBITDA rose to $416 million on higher prices. Westlake redeemed about $500 million of 3.60% senior notes due 2026 and replaced its revolving credit facility with a new $1.5 billion facility that expires in 2031.
Jun 15, 2026: Jonathan Baksht became Senior Vice President and Chief Financial Officer. He succeeded M. Steven Bender, who will retire by the end of 2026.
May 5, 2026: Westlake reported Q1 2026 results with a net loss of $169 million, or $1.31 per share. The results included a $67 million charge to settle litigation with direct purchasers of PVC pipe and fittings and $18 million of charges for facility shutdowns.