Wedoany.com Report on Feb 26th, Westlake Corporation is driving profit growth for 2026 through "self-help" measures, executives at the US-based vertically integrated petrochemical and building products company said Tuesday, while expressing cautious optimism about market demand.
During the Q4 earnings call, CEO Jean-Marc Gilson and CFO Steve Bender outlined a three-pillar plan aimed at increasing EBITDA by $600 million. The first pillar involves the closure last year of loss-making European epoxy resin and North American vinyl chloride and styrene facilities, contributing $200 million and reducing headcount by 6%; the second pillar achieves $200 million through structural savings in procurement, logistics, and other areas; the third pillar comes from improved plant accountability, reducing planned turnarounds and unplanned downtime, contributing $200 million.
Gilson stated, "There are no planned turnarounds for 2026, and there might be one in 2027. We expect the olefins business to continue operating at high utilization rates." The olefins business is part of Westlake's Performance and Essential Materials (PEM) segment, which is integrated with the Housing and Infrastructure Products (HIP) segment. The three North American vinyl chloride plants closed last year are expected to improve operating rates, which, combined with cost savings, is anticipated to enhance 2026 performance.
Regarding demand, global industrial and manufacturing activity remains challenging, and Westlake is not relying on macroeconomic tailwinds to achieve its 2026 targets. However, the company expects demand to rebound from the seasonal low in Q4 2025. Gilson noted, "We are also seeing signs of improvement in global industrial and manufacturing activity early in the year." He mentioned rising US Manufacturing PMI and lower mortgage rates improving housing affordability, leading to cautious optimism for stronger HIP and PEM volumes.
The HIP segment is expected to return to sales growth in 2026, with a revenue target of $4.4-4.6 billion and an EBITDA margin of 19-21%, aligning with the long-term target of 5-7% sales growth driven by product innovation and composite business acquisitions. Long-term housing fundamentals remain strong, supported by underbuilding, favorable demographics, and the prevalence of remote work. The molecularly oriented polyvinyl chloride (PVC) pipe plant under construction in Wichita Falls, Texas, is expected to start up this year, offering innovative products that simplify installation and reduce costs. Additionally, Westlake's strong presence in the repair and remodel market provides steady growth, supported by significant home renovation demand, healthy home equity, and project backlogs. The PEM segment, which supplies materials like PVC resin to HIP, will benefit from improved HIP sales.
