Afton Chemical parent company NewMarket Corp. reported an 8% drop in operating profit for its petroleum additives business, stating that cost increases outpaced the company’s ability to raise prices on its own products.
NewMarket, which is based in Richmond, Virginia, did not say if it plans further price hikes, but officials did say they will focus on improving profit margins, which averaged 13.2% during the three months ended March 31.
“Margin recovery and cost control will continue to be priorities throughout 2022 so that we will return to our historical profit margin range,” Chairman and CEO Thomas Gottwald said in an April 28 news release.
The petroleum additives segment, which includes fuel additives supplier Ethyl Corp. but mostly consists of Afton, which earns most of its money from lubricant additives, had an operating profit of $86.9 million for the first quarter, down from $94.1 million from the same period of 2021.
Petroleum additives sales revenue jumped 17% to $660 million. Officials said revenues rose because of increases in prices of the business’ own prices and increases in shipment volumes, adding that shipments increased for lubricant and fuel additives and in all geographic regions.
The additional revenue from raised prices, however, only partially offset increased costs for raw materials. Steep run-ups in crude oil costs have raised the expense of petroleum-based raw materials as well as fuels, and costs for some other raw materials have also risen due to supply chain problems stemming from the coronavirus pandemic.
NewMarket said it expects supply chain issues and its own performance to improve during the year.