A vertically integrated maker of building products and chemicals, Westlake makes the siding, trim, roofing, windows, and PVC pipe found on homes, plus the ethylene, polyethylene, and epoxy resins used in packaging, autos, and construction. Founded in 1986 by the Chao family, it took its name from its first plant in Lake Charles, Louisiana, and grew through big acquisitions like Axiall and Boral's North American building products. It was renamed from Westlake Chemical to Westlake Corporation in 2022 to reflect that broader portfolio.
Westlake returns to profitability in Q2 2026 as Performance and Essential Materials swings to a $185M operating profit on higher prices and volumes.
Westlake's chemical business turned profitable again. rose 11% to $3.27 billion and expanded 11.2 points to 19.9% as polyethylene and PVC prices climbed 14% and ethane costs fell, swinging the company to of $260 million from a $142 million loss a year ago. The recovery is underway, but remains negative and a $67 million antitrust charge in the building products shows legal costs are still accumulating.
Key takeaways
Performance and Essential Materials swung to a $185 million from a $318 million loss a year ago, driven by a 14% increase in average sales prices for polyethylene and PVC resin, higher caustic soda and epoxy volumes, and lower ethane and fuel feedstock costs.
Consolidated rose to 19.9% from 8.7% a year ago, as the $394 million increase in was the primary driver of the swing to a $364 million .
Housing and Infrastructure Products fell 5% to $212 million, as a $67 million charge for PVC pipe antitrust litigation and lower pipe and fittings prices offset a 10% increase in volumes.
Section summaries
Management's Discussion and Analysis
Westlake swung to Q2 2026 net income of $260M driven by higher PEM prices and volumes, lower feedstock costs, and prior-year restructuring charges.
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rose 11% to $3,271M in Q2 2026, with PEM average sales prices up 14% on higher polyethylene and PVC resin prices, while HIP volumes grew 10%.
swung to a $364M profit from a $109M loss last year, aided by a $112M drop in restructuring costs and a $394M increase.
rose 11% to $3.27 billion, with the PEM contributing higher prices and the HIP segment contributing higher volumes.
for the first half of 2026 was $224 million, up from $58 million a year ago, but remained negative at -$192 million as totaled $416 million.
The company redeemed $496 million of 3.60% Senior Notes and replaced its $1.5 billion , maintaining full borrowing availability.
What changed
The Performance and Essential Materials returned to profitability after five consecutive quarters of operating losses, with the $185 million profit in Q2 2026 marking the first positive result since Q4 2024.
The 14% increase in PEM average sales prices reversed the price declines that had driven to a cycle-low 3.4% in Q4 2025, with the 19.9% Q2 2026 gross margin the highest since Q2 2024.
The $67 million antitrust litigation charge in the HIP was a new development not flagged in prior filings, and it was the primary reason the segment's fell despite a 10% volume increase.
The non-binding letter of intent to acquire a German PVC/VCM site, disclosed in Q1 2026, was not mentioned in this quarter's filing, leaving the status of that potential acquisition unclear.
What to watch
Whether the 19.9% can be sustained or built upon in Q3 2026, or whether it represents a peak driven by the 14% price increase that may not repeat.
Whether the $67 million antitrust litigation charge in the HIP is a one-time item or signals broader exposure, and whether the segment's can recover toward the $222 million level of Q2 2025.
The trajectory of , which remained negative at -$192 million for the first half despite the return to profitability, as stayed elevated at $416 million.
Any update on the non-binding letter of intent for the German PVC/VCM site, which was disclosed in Q1 2026 but not addressed in this quarter's filing.
PEM improved by $503M to $185M, driven by higher polyethylene/PVC prices, caustic soda/epoxy volumes, and lower ethane and fuel costs.
HIP dipped 5% to $212M as lower pipe and fittings prices and a $67M antitrust litigation charge offset volume gains.
improved by $166M to $224M for H1 2026, while remained negative at -$192M due to $416M in .
The company redeemed $496M of 3.60% Senior Notes and replaced its $1.5B , maintaining full borrowing availability.
Quantitative and Qualitative Disclosures About Market Risk
Commodity, interest rate, and foreign currency exposures are managed through derivatives and natural hedges; none are deemed material to pre-tax income.
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Commodity price risk is managed via feedstock flexibility, downstream product mix, and derivatives; a hypothetical $0.10 rise in ethane or natural gas would not materially impact pre-tax loss.
Fixed-rate debt of $5,149 million carries refinancing risk: a 1.0% rate increase would raise annual by approximately $51 million.
Variable-rate debt is minimal at $11 million with a 2.80% weighted average rate; a 100 increase would not materially change .
No SOFR-based borrowings were outstanding under the Credit Agreement at quarter-end.
Foreign currency exposure is partly hedged with €150 million in net investment hedges and €700 million of euro-denominated senior notes designated as a non-derivative hedge.
EPA proposes settlement for alleged Clean Air Act violations at Louisiana facilities; penalty may exceed $1 million.
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The EPA proposed a settlement and draft consent agreement in May 2026 to resolve alleged Clean Air Act violations from 2020–2025 at several Louisiana facilities.
The alleged violations pertain to the Risk Management Program and general duty clause of the Clean Air Act.
The company is currently engaged in negotiations with the EPA, and resolution may involve a civil penalty exceeding $1 million.
The company also faces other environmental proceedings with potential monetary sanctions that could exceed $1 million, as described in prior filings.
The company does not believe any of its pending legal proceedings will have a material adverse effect on its financial condition, results of operations, or cash flows.
For a discussion of risk factors, please read Item 1A, "Risk Factors" in the 2025 Form 10-K. The risks described in the report and in other documents that we file from time to time with the Securities and Exchange Commission could materially and adversely affect our business, re…
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For a discussion of risk factors, please read Item 1A, "Risk Factors" in the 2025 Form 10-K. The risks described in the report and in other documents that we file from time to time with the Securities and Exchange Commission could materially and adversely affect our business, results of operations, cash flow, liquidity or financial condition.
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