Quarterly financial reports issued during the past week offered mixed signals about the health of the lubricants industry. The Lubrizol Corp. reported a 61 percent jump in income but expressed caution about the rest of the year. Ashland Inc. said profits from Valvoline declined but that is was pleased with the subsidiarys performance. Milacron Inc. announced a $1.8 million operating loss for its Metalworking Technologies division but predicted that it will turn around later this year.
Lubrizols consolidated net income increased from $18.5 million, or 36 cents per share, to $29.8 million, or 58 cents per share. The jump in profits was due primarily to a rise in sales, which grew from $454.6 million to $467.5 million, an increase that equaled the revenue growth resulting from the buyout of the companys partner in an Indian joint venture.
Shipment volume in North America and Europe grew 9 percent while deliveries to the rest of the world, excluding India, fell 6 percent. Besides sales growth, Lubrizols bottom line was bolstered by the elimination of a $2.7 million charge for amortization of goodwill and a lower tax bracket.
Chairman, President and Chief Executive Officer W.G. Bares said the Wickliffe, Ohio additive maker gained partial relief from earlier hikes in raw materials costs and is benefiting from recent acquisitions – with more planned for 2002. Still, he did not predict that earnings will grow this year.
While we are encouraged about our improved first quarter results, our outlook for the remainder of 2002 continues to reflect uncertainty about the world economy and the strength of the anticipated recovery, he said. In addition, recent higher crude oil prices and volatility are pressuring downstream petrochemicals, and we believe raw material costs will increase in the coming months.
Valvolines second-quarter profits dropped 11 percent to $17 million, due to lower sales of automotive refrigerant. Otherwise, parent company Ashland Inc. said, the divisions activities improved. Officials reported strong sales of lubricants and record performances by Valvoline Instant Oil Change and Eagle One appearance products, although they did not provide details. International operations and automotive chemicals had across-the-board improvements.
For the three months ended March 31, Valvoline had operating revenue of $273 million, up 2.2 percent from the same period a year earlier. On a volume basis, lubricant sales rose from 11,600 barrels per day to 12,700 barrels per day.
Ashland Chairman and Chief Executive Officer Paul W. Chellgren said management was pleased with Valvolines performance and expects its income for the current fiscal year to be in line with last years.
Milacron reported that its Metalworking Technologies division, one of the worlds largest suppliers of metalworking tools, abrasives and fluids, posted a first-quarter operating loss of $1.8 million, after earning $11.2 million during the same period of 2001. Sales fell from $162 million to $139 million, due to softer demand from the automotive and electronics industries, as well as from makers of industrial machinery.
The Cincinnati, Ohio-based company, which also produces manufacturing equipment and components for the plastics industry, said it has made further progress in streamlining its businesses. It added that, for the first time in seven quarters, new orders did not decline from the previous quarter.
We believe this is a sign that the manufacturing recession has bottomed out, Chairman, President and Chief Executive Officer Ronald D. Brown said. He predicted that non-equipment sales of plastics and metalworking technologies will grow as industrial activity recovers.