Quaker Chemical Corp. announced yesterday that its net income for 2003 was 3.7 percent higher than in 2002, with sales revenue jumping 24 percent. Milacron Inc. reported earlier that the operating profit for its industrial fluids business grew 9 percent last year, mostly due to favorable currency exchange rates.
Quaker Chemical, of Conshohocken, Pa., said it had sales revenue of $340.2 million last year, up from $274.5 million in 2002. Acquisitions added $14 million to the top line, while favorable currency translation contributed $18.2 million. New contracts for chemical management services brought $27 million, accounting for most of the remaining sales growth.
Net income – $14.8 million in 2003 compared to $14.3 million in 2002 – grew at a much slower rate for several reasons. First, costs for raw materials rose to their highest levels in four years. Second, the exchange rate fluctuations that lifted revenues also pushed up selling and administrative expenses. Finally, the company has much lower margins on its CMS contracts, which are a new line of business for it.
Quaker Chemical officials said they expect another year of solid revenue growth in 2004. They also expect raw materials costs to ease somewhat, but added that expenses will probably rise for other items, such as pensions, health insurance and restoration of performance-based pay incentives. Overall, management predicted a slight increase in earnings this year.
Milacron, of Cincinnati, Ohio,said that sales by its industrial fluids segment grew 8.5 percent to $104.2 million, with favorable currency translation accounting for nearly all of the improvement. Segment operating earnings were $15.7 million, 9 percent higher than in 2002. Operating earnings as a percent of revenue held steady at 15 percent.
The fluids segment continued to contribute most of Milacrons earnings – 69 percent in 2003 – despite accounting for just 14 percent of revenue.
Sales and operating earnings for the fluid segment dropped in the fourth quarter due to extended shutdowns at auto factories and overall weakness in the European economy. Still, management said industrial activity finally appears to be emerging from the recession, as manufacturing orders returned to levels last seen in 2000. Milacron officials predicted the companys performance will improve substantially this year.