Mergers and acquisitions in recent years have reduced the number of companies filing financial reports on lubricants operations but the picture painted by those that remain is not encouraging. Valvoline has to date defied the downturn, according to the fiscal year-end report released Monday by parent company Ashland Inc. The motor oil business had a record fourth quarter, with income of $30 million on revenue of $309 million, up from $25 million and $289 million, respectively during the same period of 2000.

For the fiscal year ended Sept. 30, Valvolines income grew from $78 million to $81 million. Ashland Chairman and Chief Executive Officer Paul W. Chellgren noted that overall motor oil sales were flat but that volumes of premium products grew 27 percent and now account for 10 percent of Valvolines sales. The industry average, he said, is 5 percent of sales.

Max-Life has achieved market acceptance certainly beyond our expectations, he told investment analysts during a conference call, referring to a newengine oilmarketed at vehicles with more than 75,000 miles.

Reports from others in the lubes industry have been more downbeat. On Tuesday, Lubrizol announced consolidated net income of $22.8 million, or 45 cents per share, in line with an earnings warning issued three weeks ago. Those numbers were almost level with the third quarter of 2000 but were a dime per share lower than the company forecast during the summer.

The Cleveland, Ohio, additive maker attributed the slide mostly to a sharp drop-off in orders during the second half of September. It also warned that it does not expect that trend to reverse soon.

“Our outlook for the remainder of the year is clouded by the obvious uncertainty about the world economy, Chairman, CEO and President William G. Barespronounced in a written statement. Order patterns early in the fourth quarter in North America and parts of Asia are lower than we anticipated.

Pennzoil-Quaker State Co. is not scheduled to release its third quarter results until next week but it announced last week that it expects revenues of approximately $600 million and earnings of 21 cents per share. That projection is in line with estimates made during the summer when the company cited slumping sales and slashed its dividend 87 percent to 2.5 cents per share.

Despite such results, analysts said companies like Pennzoil-Quaker State, which focus on the consumer motor oil market, may weather an economic slump better than others in the lubricants industry.

It seems to me that car care is far less discretionary than a lot of other things that we spend money on, said Richard Leader, of Burnham Securities Inc., which manages portfolios that include Pennzoil-Quaker State stock. Theyve been cutting costs and reducing debt. I expect their performance to pick back up before too long.

The sagging economy appears to be weighing more heavily on lube companies catering to the industrial sector. Kline estimates that the sector has declined approximately 8 percent this year, compared to 3 percent for the consumer automotive market and 4 percent for commercial automotive.

While end user industries such as power generation, highway construction and food processing have grown slightly, the auto industry, a huge lube consumer, has slowed markedly. Sales of cars and light trucks have dropped 5.7 percent this year.

Poor auto sales have resulted in a build-up of inventories that have had an impact on production and hence usage of lubricants, Agashe said. Machines are idle and the outlook is not very optimistic.

Milacron, one of the worlds largest metalworking fluid producers, warnedlate last month that third-quarter sales of metalworking tools and fluids, scheduled to be reported Nov. 9,are down at least 25 percent due to sharply lower manufacturing activity. After the warning, the Cincinnati, Ohio, companycut its dividend to 1 cent per share and amended a credit agreement.

Quaker Chemical Corp., another metalworking fluid producer, said a worldwide economic slowdown was mostly to blame for a 21 percent decline in its third quarter earnings, which fell to $3.7 million. Like others, the Conshohocken, Pa., company does not expect a turnaround this year.

Our expectations are that fourth quarter earnings will be similar to the third quarter as we expect continued weakness in the global economy, Chairman and CEO Ronald J. Naples said, although current events and their impact create considerable unpredictability.