Earnings Up at Quaker, Down at Milacron


Quaker Chemical Corp. said last week that third quarter net income jumped 83 percent from the same period of 2004, thanks primarily to increases in prices for its own products. The industrial lubricant supplier also announced a restructuring plan aimed at trimming costs by up to $10 million.

Milacron Inc., meanwhile, reported a 36 percent drop in earnings for its Industrial Fluids segment, largely due to its inability to keep up with higher costs.

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Quaker Chemical reported Nov. 1 that it had sales revenue of $105.8 million for the three months ended Sept. 30, up 6 percent from the same period of last year. Two thirds of the increase stemmed from higher prices, with the rest due to favorable shifts in currency exchange rates.

The Conshohocken, Pa., companys cost of goods sold during the quarter was 5.7 higher than the third quarter of 2004, but selling and administrative expenses rose just 2.4 percent, allowing revenue to rise at a faster pace than costs. Net income jumped to $2.2 million, up from $1.2 million.

We are pleased with the progress that we made in the third quarter in the areas of revenue growth, margin restoration, and cost control in the face of a still very difficult market environment, Chairman and Chief Executive Officer Ronald J. Naples said. We are cautiously optimistic that we have begun the climb back after the lows of the last half of 2004 and the beginning of 2005.

Naples said Quaker Chemical has done a good job building up its market share, but he added, [w]e cannot rely solely on our strong competitive positioning and external improvements to drive earnings growth. Management has studied options for the past few months, he said, and intends to announce a restructuring plan during the fourth quarter. Without discussing specific steps, Naples said the plan will affect essentially all activities in the United States and Europe,with a goal of more effectively aligning resources with our strategic priorities and achieving greater effectiveness through a much reinforced local execution capability.

Milacrons Industrial Fluids segment had sales of $27 million, essentially flat with the year-ago period. But its earnings fell from $2.8 million to $1.8 million. Management attributed the slide to higher-than-projected material costs and increased insurance costs for product liability.

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