Afton Chemical reported higher operating profit and a decrease in sales for its third quarter, and Valvoline’s operating income and sales from its three segments increased year over year for the quarter ending Sept. 30.
Afton Chemical, the petroleum additives segment of NewMarket Corp., reported operating profit of $102.2 million for its third quarter, up 8% from $94.8 million in 2019’s third quarter.
“The increase was due to lower raw material costs, selling, general and administrative costs, and research and development costs, partially offset by changes in selling prices, higher conversion costs and lower shipments,” NewMarket Chairman and CEO Thomas Gottwald said in an earnings release.
Sales for the segment declined to $510.3 million, down 7% from $550.6 million. The decrease was due mainly to lower shipments and selling prices, Gottwald noted.
The third quarter operating results reflected continued improvement in some of the key drivers that affect the performance of the additives business, he said, consistent with what the company began to see near the end of the second quarter.
“With gasoline consumption and miles driven continuing to show improvement and industrial production beginning to rebound, specifically related to automobile plants reopening and producing vehicles, demand for both our lubricant and fuel additives has increased steadily throughout the quarter,” Gottwald said.
“While our second quarter results were significantly impacted by the economic disruption due to the COVID-19 pandemic and the related government restrictions, these improvements in the third quarter of 2020 helped to drive an increase in shipments compared to the second quarter of over 25%. The pace and stability of improvement will depend heavily on economic recovery and the rate at which government restrictions are lifted and remain lifted.”
Richmond, Virginia-based NewMarket reported net income of $95.8 million, or $8.77 per diluted share, up 41% from $67.8 million, or $6.06 per diluted share.
Valvoline’s three operating segments – Core North America, quick lubes and international – posted a combined operating income of $136 million for the quarter, up 18% from $115 million in the year-earlier period.
The Lexington, Kentucky-based company’s three segments combined for $652 million in sales for the quarter, up 4%. The Core North America segment accounted for $252 million, or 39% of sales. Quick lubes tallied $254 million, also about 39%. International totaled $146 million, or 22%.
The Core North America segment sold 23.1 million gallons of lubricants in the quarter, down 3% from 23.9 million gallons. Quick-lube lubricants sales volume totaled 8.3 million gallons, up 12%. International lubricant sales volumes declined to 14.8 million gallons, down 2%.
The quarter ending September 30 is the fourth quarter of Valvoline’s fiscal year.
For the company’s full fiscal year, the combined operating income reached $444 million, up 7% from $415 million in the prior fiscal year.
The business segments’ combined full-year sales decreased to $2.35 billion, down slightly from $2.39 billion. Core North America tallied $945 million or 40% of sales, quick lubes accounted for $883 million or 38%, and international totaled $525 million or 22%.
For the year’s sales, Core North America sold 84.4 million gallons, down 8% from 92.1 million. Quick lubes sold 28.9 million gallons, up 3%, and international sold 54.7 million gallons, down 6%.
“We saw strong sequential and year-over-year improvements in profitability in quick lubes and
Core North America and exceptional sequential profitability improvement in International in [fiscal] Q4,” Valvoline CEO Sam Mitchell said in the company’s earnings news release. “Our results this quarter significantly exceeded our expectations and demonstrate the true resiliency and competitive advantages of our business model. Core North America generated near-record quarterly profitability driven by ongoing performance in the retail channel and benefits from lower raw material costs.”