Afton Chemical, the petroleum additives segment of NewMarket Corp., reported operating profit of $79.5 million for its fourth quarter, up 7.2 percent from $74.2 million from the same period in 2017. Sales for the petroleum additives segment slid 3.5 percent to $537.2 million in the fourth quarter.

“The increase [in operating profit] was mainly due to changes in selling prices and foreign currency rates, partially offset by higher raw material costs and lower shipments,” NewMarket CEO Thomas Gottwald said in the company’s earnings news release. Shipments were down 10.2 percent from the same period last year, with decreases in both lubricant additives and fuel additives shipments. “All regions except Asia-Pacific contributed to the decrease in lubricant additives shipments,” Gottwald noted.

For the full year, operating profit for the Richmond, Virginia-based company declined 9.9 percent to $311 million. The decrease was due mainly to higher raw material and conversion costs, partially offset by changes in selling prices, he said.

For full year 2018, petroleum additives sales edged up 4.3 percent to $2.3 billion. Shipments decreased 2.8 percent compared to 2017, with decreases in both lubricant additives and fuel additives shipments. The regional drivers were consistent with the drivers impacting shipments during the fourth quarter.

NewMarket reported $62.8 million in net income or $5.58 per diluted share for the fourth quarter, up 1,431 percent from $4.1 million in net income or 35 cents per share for 2017s fourth quarter. For the full year 2018, NewMarket reported $234.7 million in net income, or $20.34 per diluted share. Thats up 23.2 percent from $190.5 million in net income or $16.08 per share.

A change in income tax expense accounted for the dramatic change in net income for both the fourth quarter and full year. The main driver for the difference between the comparative periods was additional income tax expense in the fourth quarter of 2017 of $31.4 million related to the enactment of the Tax Reform Act, primarily due to a one-time deemed repatriation tax on untaxed accumulated foreign earnings, Gottwald explained. In addition, the Tax Reform Act reduced the U.S. corporate tax from 35 percent to 21 percent beginning in 2018, reducing the income tax expense in both 2018 periods.

Valvoline

Valvoline’s operating income declined 10.3 percent to $87 million for its three operating segments – North America, quick lubes and international – during its first fiscal quarter ending Dec. 31.

The Lexington, Kentucky-based company posted total sales of $557 million, up 2.2 percent from $545 million in the same quarter of 2018.

The core North America segment accounted for almost 42 percent, quick lubes for about 34 percent and international sales for around 24 percent.

North American lubricant sales declined 7.6 percent to $232 million during the quarter. Lubricant sales volume for the segment slid 8.8 percent to 21.7 million gallons. The declines in lubricant volume and segment profitability were primarily due to lower [do-it-yourself] branded volume in the retail channel, the company stated in its earnings news release. Ongoing weakness in the broader retail automotive lubricant market compounded the impact of continuing competitive challenges, including increased competitive promotional activity and changes in retailer promotional and merchandising tactics.

Valvoline said that in response to current dynamics in the do-it-yourself market, the company is taking actions that it expects to stabilize its retail business in North America. In addition to a stronger consumer communications plan, the company is implementing a more aggressive trade promotion plan, which includes optimizing promoted price points at key retailers.

Quick lube sales jumped to $189 million, up 22.7 percent from $154 million in the year-earlier period. Quick lube lubricant sales volumes reached 6.5 million gallons, up 14 percent. The company posted a net increase of 59 total company-owned and franchised stores during the quarter, and had 1,301 at the end of the quarter.

The company’s international segment sales edged down to $136 million, a fall of about 3 percent from $140 million during the same period in 2017. International lubricant sales volume decreased 3.5 percent to 13.8 million gallons. Volumes were soft in most regions, the company said, especially in emerging markets.

Valvoline announced a broad-based restructuring program that is expected to reduce costs, simplify processes and ensure the organizations structure and resource allocation focus on key growth initiatives.

“We were pleased with the continued strong performance in quick lubes; however, overall results were below our expectations driven by weak performance in the core North America retail channel,” CEO Sam Mitchell said in Valvoline’s earnings news release. “We are moving decisively to address the continuing challenges in core North America through aggressive trade promotion and pricing optimization, and we are confident that we will see improving performance in the business throughout the balance of the year. In response to industry headwinds and evolving customer trends, we are implementing a broad-based restructuring program to create a more agile organization with an improved, competitive cost profile.”