Lubes Players Post Sales Gains


Ethyl Corp., Quaker Chemical Corp. and the industrial fluids business of Milacron all recorded sales surges for the first quarter of 2004. Profitability, though, was more of a mixed bag. Ethyls jumped, Quaker Chemicals rose moderately and earnings for the Milacron segmentfell.

Ethyl reported Friday that it had $5.8 million in earnings from continuing operations for the quarter ended March 31, compared to a loss of $100,000 during the same period of 2003. Net income for the first quarter of 2003 was $16.3 million, including $14.8 million from the sale of the companys phenolic antioxidants business, and the company had no non-recurring items for the first quarter this year.

The additive supplier, which is based in Richmond, Va., said that sales for its Petroleum Additives segment shot up 25 percent, with increases in all major product groups. The segments bottom line improved despite rising raw materials costs, as its operating profit grew 33 percent to $14.9 million. Officials noted that Petroleum Additives passed only a small portion of its cost increases on to customers.

We are extremely pleased with the growth in our petroleum additives segment, President and Chief Executive Officer Thomas E. Gottwald said. Our improved earnings reflect the success of our ongoing focus to increase profitability of our product lines. However this is being made more difficult due to increasing raw material cost.

Quaker Chemical, also reporting Friday, said sales revenue jumped 34 percent in the first quarter to $98.1 million, versus a year earlier, mostly due to new contracts for chemical management services, more favorable exchange rates and acquisitions. The Conshohocken, Pa., lubricant maker had year-to-year organic sales growth of 4 percent thanks to healthy gains in the Asia-Pacific region and South America.

Net income grew at a much slower pace – up 7 percent to $3.3 million – as gross margins slid from 38.7 percent of sales to 33.1 percent of sales. Margins fell primarily because of the structure of CMS contracts, under which Quaker Chemical serves largely as an agentfor products supplied by other companies. Quaker Chemical counts as revenue the full price that its customers pay for those products.

Officials said they see demand rising in their markets, buttheir outlook is tempered by concerns for costs.

We are seeing signs of an improving global economy with sequential quarterly growth in all four regions and especially high growth in the South American and Asia/Pacific markets, Chairman and Chief Executive Officer Ronald J. Naples said. However, partially offsetting the positive impact of this growth is the continuation of high raw material costs as well as higher expenses that are primarily a result of higher pension, insurance, Sarbanes-Oxley compliance and ERP implementation expenses.

Milacron reported April 26 that its industrial fluids business had sales of $26 million during the first quarter, up from $25 million during the same period of 2003. The Cincinnati, Ohio, company attributed the increase to fluctuating currency exchange rates. Earnings dropped 29 percent to $2.5 million primarily because of higher insurance and pension expenses. Officials said they are encouraged that demand seems to be increasing.

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