Rounding out a year since COVID-19 struck its home market, Afton Chemical continued to run behind pre-pandemic performance, posting a double-digit year-to-year decrease in profits for the quarter ending March 31, despite slightly higher sales.
The petroleum additives business, a segment of Richmond, Virginia-based NewMarket Corp., reported an operating profit of $94.1 million for the first quarter, down 17% from $113.7 million in 2020’s first quarter.
“This decrease was due mainly to lower selling prices and higher conversion and raw material costs, partially offset by increased shipments,” NewMarket Chairman and CEO Thomas Gottwald said in the Richmond, Virginia-based company’s earnings news release.
“Shipments increased 2.6% between periods, with increases in lubricant additives shipments partially offset by decreases in fuel additives shipments.” All regions except Europe contributed to the increase in lubricant additives, Gottwald added.
Afton’s sales revenue for the quarter edged up 1% to $564.9 million.
While expressing satisfaction with the petroleum additives operating results for the quarter, Gottwald said the company remains mindful of the negative impact that its increasing raw materials costs have on its operating margins. “We will focus on margin improvement during 2021 to help ensure our operating margins remain at the historical ranges our shareholders have come to expect,” he said.
Government restrictions on travel and work related to COVID-19 have also had a negative effect on the company’s petroleum additives business, he noted. “The pace and stability of improvement in demand for our products will continue to depend heavily on economic recovery and the rate at which restrictions are lifted and remain lifted,” Gottwald said. “We will continue to monitor the government restrictions as well as the status of vaccination programs that are being implemented globally. We expect successful vaccination efforts will help provide more stability in the global economy in 2021.”
Overall, NewMarket reported net income of $69.7 million for the first quarter, or $6.38 per share, compared with $85.5 million net income, or $7.67 per share, for the same quarter in 2020.