Profits Down at Ethyl, Quaker; Up at Milacron


Higher costs dragged down third-quarter financial performance for Ethyl Corp. and Quaker Chemical Corp., despite sharp year-to-year increases in sales. Ethyls net income fell 5.5 percent, while Quaker Chemicals dipped 4.7 percent.

Milacron Inc.s industrial fluids segment bucked the trend with a 41 percent jump in operating profit.

Ethyl reported net income of $10.3 million, or 61 cents per share, for the quarter ended Sept. 30, compared to $10.9 million, or 65 cents per share, in the same period a year ago. Based on continuing operations, the performance of this years third quarter marked a slight improvement, as the year-ago period included a profit of $722,000 from its former phenolic antioxidant business. Ethyl sold that operation to Albemarle Corp. for $23.2 million earlier this year.

Net sales jumped 14 percent to $197.1 million, but the increase was counteracted by rising costs for raw materials and other operating activities. Expenses for selling, administration, research, development and testing climbed 14.9 percent.

As a result, operating profit from the companys petroleum additives segment fell 19.6 percent to $19.2 million, even though sales swelled 13.7 percent to $194.1 million. Overall, the Richmond, Va., company would have recorded a bigger drop in earnings if not for its sales of tetraethyl lead. As management noted, worldwide demand for the product continues to decline, but Ethyl reaped an operating profit of $9.4 million from the product, up from $3.1 million a year ago.

President and Chief Executive Officer Theodore E. Gottwald said he was pleased with the results, given that performance during the third quarter of 2002 was exceptionally strong. He noted that the third quarter of 2003 was the strongest period this year and said that the companys performance for the first three quarters was its strongest since 1999. The company also lowered its debt by $68 million so far this year.

Quaker Chemicals third quarter net income fell to $4.1 million, or 42 cents per share,from $4.3 million, or 45 cents per share, a year earlier. Quarterly sales leapt 22 percent to $89.7 million, thanks mostly to favorable currency exchange rates, acquisitions and new chemical management services contracts. Sales by existing operations grew 1 percent, with double-digit growth in Asia and South America outweighing decline in the United States.

The Conshohocken, Pa., company said that gross margins as a percent of sales fell from 40.1 percent a year ago to 34.3 percent. Two-thirds of the decline was due to a change in the method of accounting for CMS sales, but management also cited higher raw materials costs.

Chairman and Chief Executive Officer Ronald J. Naples said the company is experiencing softer-than-expected demand in North America and Europe and has been notified that some large customers may take unusually long shutdowns in December.

We do expect to see some pickup in business volumes in the fourth quarter primarily due to market share gains, he said. However, this expectation is tempered by what we still see as significant demand uncertainty in many of our key markets for the fourth quarter as well as into next year.

Cincinnati, Ohio-based Milacrons fluids segment recorded sales of $26.4 million during the quarter, up from $24.7 million during the same period of 2002. Pre-tax operating earnings rose 41 percent to $4.8 million. Earnings as a percent of sales jumped from 13.8 percent in the year-ago period to 18.2 percent.

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