The calendar year started off on a good note for two lubricant industry heavies. Lubrizol Corp. reported last week that it had a profit of $37.5 million during the first quarter of 2004, up 44 percent from the same period of 2003. Valvoline parent company Ashland Inc. said meanwhile that the automotive consumer products marketer generated operating income of $24 million for thequarter ended March 31, a jump of 33 percent.
Credit for the improvement in Lubrizols performance went primarily to the companys Fluid Technologies for Industry (FTI) segment. The Wickliffe, Ohio, additive supplier said Friday that revenue for the segment rose 34 percent from the first quarter of 2003 to $148 million, with half of the increase due to acquisitions. Revenue from existing operations grew because of higher shipment volumes, favorable currency translation and better product mix. As a result, the segments contribution to income rose 25 percent to $26 million.
Revenue for the Fluid Technologies for Transportation (FTT) segment climbed 8 percent to $421 million, with half of the improvement owing to exchange rate fluctuations. The increase was also driven by better product mix and hikes in Lubrizols prices, but these improvements were offset by higher manufacturing costs. The segments contribution to income was unchanged at $76 million.
Overall, Lubrizols sales rose 14 percent to $578 million. Disregarding one-time income and expenses, first quarter earnings from ongoing operations rose 16 percent from the same period of 2003. Chairman and outgoing Chief Executive Officer W.G. Bares said management was pleased with the performance and expects more of the same as the economy continues to recover.
“I am delighted with the outstanding earnings increase and encouraged by improving business conditions in the quarter, Bares said. Demand for FTT’s lubricant additives improved compared to weak conditions in 2003. FTI results for the quarter were particularly strong, with all FTI businesses posting increases in revenues. Economic recovery, new products, market share gains and geographic expansion drove double-digit organic growth for FTI.
Lubrizol also made several appointments on Monday. In accordance with plans announced in March, the board of directors elected President James L. Hambrick to succeed Bares as CEO. Larry Norwood, general manager of the companys Texas facilities, was elected to succeed the retiring Joe E. Hodge as vice president for operations. The company also announced that Vice President for FTI Donald W. Bogus will become president of Noveon once Lubrizol closes on its acquisition of the chemical company.
Ashland, which begins its fiscal year Oct. 1, announced Monday that Valvoline pulled in sales revenue of $324 million during its second quarter, 7.6 percent higher than the same period a year ago. Sales volumes of lubricants actually fell 2.3 percent to 47.5 million gallons, but sales of premium products jumped 5 percent and now constitute 21.4 percent of branded volumes in the United States.
In addition to the more favorable product mix, the Covington, Kentucky-based business also benefited from increased revenue for services other than oil changes at its Valvoline Instant Oil Change quick-lube chain. Valvolines international operations raised sales volumes and, once again, took advantage of exchange rate fluctuations.