Profits were up for S-Oil and for Milacrons Fluid Technologies segment, while Afton Chemical reported lower operating profit, BPs lubricants business recorded lower profits, Quaker Chemical posted decreased net income, and Fuchs third quarter profit after tax was unchanged, all for the quarter ending Sept. 30, compared to a year earlier.
Seoul-headquartered S-Oil posted third-quarter operating income of 126.3 billion won (U.S. $112.3 million) for its lube base oil segment, up 29.7 percent from 97.4 billion won in the year-ago quarter. Revenue rose 25.8 percent to 405 billion won, up from 321.9 billion won.
In its earnings presentation, S-Oil said it expects downward pressure on lubricating base oil margins in the fourth quarter due to low seasonality, in spite of steady demand growth for high-quality base oil products in the United States and Europe.
Afton Chemical, NewMarket Corp.s petroleum additives segment, reported operating profit of $87.9 million, down 17.4 percent from $106.4 million in the year-earlier period. The decrease was due to higher raw material and conversion costs, and changes in selling prices and product mix, partially offset by increased shipments, NewMarket stated in its earnings news release.
Additive segment sales reached $546.2 million, up 6.6 percent. Shipments between quarterly periods were up 4.7 percent from the same period last year, with increases in both lubricant additives and fuel additive shipments, NewMarket said. Europe and Latin America were the main regions contributing to the increase in lubricant additives shipments, and Europe was the primary driver of the increase in fuel additives shipments.
The company noted that while petroleum additive sales and shipments remained strong in 2017, it had seen a decrease in operating profit margins during the past two quarters and in the nine month period as compared to last year. Multiple increases in raw material costs have continued to put downward pressure on margins, and our actions with regard to pricing have not kept pace, the company said. Given this environment, our ongoing focus will be to strengthen our margins so that they continue to be within the historical ranges our stakeholders have come to expect. We continue to believe that the fundamentals of the industry as a whole remain unchanged.
As a whole, Richmond, Virginia-based NewMarket posted net income of $59.8 million, or $5.04 per diluted share, down 16.3 percent from $71.4 million, or $6.03 per diluted share, a year earlier.
Independent lubricant blender Fuchs Petrolub reported earnings after tax of 64 million (U.S. $74.6 million), unchanged from a year earlier. Sales revenue rose to 615 million in the third quarter, up 8.5 percent from 567 million.
As a whole, the Mannheim, Germany-based company reported growth in sales revenue in all its regional divisions, compared to year-earlier sales.
Europe increased 8.7 percent to 391 million, Asia-Pacific and Africa rose 18.6 percent to 181 million, and North and South America grew 10.9 percent to 97 million. The 615 million total was lowered by 54 million in consolidation costs.
Fuchs said in its earnings news release that it expects the strong growth in sales revenue to continue. So far, increases in raw material prices have not been passed on as quickly as expected, and it will probably not be possible to compensate for those effects during this year, The company stated, adding that, in connection with the strong growth in Asia-Pacific and Africa, inventories increased significantly in the third quarter, and this is likely to continue in the following months. The investments in new plants and plant expansion will also be continued.
BPs lubricants business reported an underlying replacement cost profit before interest and tax of $356 million for the third quarter, down 3.8 percent from $370 million for the same period in 2016.
The result for the quarter reflects continued premium brand growth, more than offset by the impact of higher base oil prices due to temporary supply constraints and increasing crude oil prices, BP said in its stock exchange announcement summarizing its results.
Lubricant supplier Quaker Chemical Corp. reported net income of $11.1 million for the third quarter, down 30.6 percent from $16 million a year earlier. The company noted the net income included $9.7 million of expenses incurred related to the companys previously announced, pending combination with Houghton International.
Quaker Chemicals net sales reached almost $213 million, up 11.9 percent from $190.4 million. The company attributed the increase in net sales to a 5 percent increase in organic volumes, a 2 percent increase from acquisitions, a 3 percent increase due to changes in price and product mix, and the positive impact from foreign currency translation of $3.8 million, or 2 percent.
While our gross margins declined due to raw material price increases, we were able to partially offset this decline with savings realized from our previously announced restructuring program and other cost streamlining initiatives, Quaker Chairman, CEO and President Michael Barry said in its earnings news release.
Cincinatti-headquartered Milacron Holding Corp.s Fluid Technologies segment – which supplies metalworking and industrial fluids – posted operating earnings of $4.7 million for the third quarter, up 14.6 percent from $4.1 million a year earlier.
Sales for the third quarter reached $30.7 million, up 9.3 percent from $28.1 million in the same period a year ago. Excluding $800,000 of unfavorable effects from currency movements, sales increased 6.4 percent compared to the prior year period.