Ashlands Valvoline division reported higher sales but a drop in operating income, while lubricant supplier Quaker Chemical recorded increases in profit and revenue for the quarter ending June 30, compared to year-earlier results.
Parent company Ashland said Valvoline posted operating income of $51 million for the three months ending June 30 (the third quarter of Ashlands fiscal year), down 30 percent from $73 million in the year-earlier quarter. Valvolines sales for the current quarter reached $522 million, nearly 13 percent higher than in the year-ago quarter.
Total lubricant volume amounted to 44.5 million gallons for the quarter, down almost 4 percent from the year-ago period and 1 percent from the quarter ending March 31, 2011. Ashland said the total lubricant volume declines can be attributed to two factors. First, higher gasoline prices likely led to fewer miles driven, thus reducing the need for oil changes, the company noted in its earnings release. Second, supply constraints due to flooding on the Mississippi and Ohio rivers early in the quarter restricted Consumer Markets [Valvolines] ability to meet customer demand.
Valvolines premium lubricants (including synthetic, semi-synthetic and MaxLife products) accounted for 32.3 percent of its U.S. branded volumes in the quarter, up from 30.1 percent in the year-earlier quarter.
Ashland Chairman and CEO James OBrien said the companys principal challenge in the near term remains the recovery of raw-material cost increases. While Ashland has recovered these cost increases on an overall basis through pricing, our commercial units have had varying degrees of success. We will remain focused on, and continue to take, appropriate pricing actions to recover our costs and ultimately restore margins.
Ashland of Covington, Ky., as a whole posted operating income of $120 million, on revenues of $1.7 billion.
Quaker Chemical reported $167.8 million in net sales for 2011s second quarter, up 23.4 percent from $136 million in the year-ago quarter.
Conshohocken, Pa.-based Quaker Chemicals net income rose nearly 7 percent to $9.8 million in the second quarter, compared to $9.2 million in 2010s second quarter.
While we continued to implement price increases in the second quarter to help offset higher raw material costs, raw materials also continued to escalate, said Quaker Chemical Chairman, CEO and President Michael Barry. We are taking additional pricing actions in the third quarter as part of our efforts to restore margins to historically acceptable levels.
Barry noted that in the second half of 2011, we see some potential demand uncertainty in markets such as China, India and Brazil as their governments try to manage inflation. However, over the next several years, we still believe these markets will have strong growth especially for our key steel and automotive markets, and we are continuing to invest in additional resources in these areas.