Third Quarter a Boon for Fuchs, Afton


Fuchs Petrolub AG and Afton Chemical Corp. both posted bumper third quarter performances despite continuing pressure from rising raw material costs. Fuchs net income jumped 130 percent from the same period of 2004, thanks to a combination of increased sales, cost containment and a land sale. Afton rode a surge in sales to an 85 percent rise in operating profit.

Fuchs announced yesterday that it had net income of 24.6 million (U.S. $28.8 million) for the three months ended Sept. 30, up from 10.7 million in the third quarter of last year. Part of the improvement stemmed from an increase in sales, which rose 8.9 percent to 306.9 million.

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Cost of sales increased 10.5 percent to 197.1 million – a reflection of higher costs for base oils and other raw materials. But selling, administrative and research and development spending was held virtually unchanged at 76.3 million. The Mannheim, Germany, lubricant supplier also benefited from the sale of unused property – which brought 6.3 million – and the cessation of goodwill amortization, which cost 2.2 million during the third quarter of 2004.

Management said the company can cope with raw material costs because of its strategy of focusing on specialty lubricants and its disciplined approach to managing expenses.

Raw material costs have again risen strongly in the third and beginning of the fourth quarters, said Stefan Fuchs, chairman of the companys Executive Board. It is unlikely that these increases will abate. The Fuchs Petrolub Group continues to counter this with their specialization strategy, consistent increase in sales prices and ongoing disciplined cost management.

Afton parent company NewMarket Corp. said Oct. 26 that the petroleum additives segments operating profit jumped from $9.4 million to $17.4 million for the three months ended Sept. 30. Management said the improvement was due mainly to a surge in sales, which rose 20 percent to $267.4 million. It attributed the sales uptick to Aftons strategy of offering a diverse range of additives that allow customers to differentiate their products.

Officials seemed especially pleased that Richmond, Virginia-based Afton recorded its gains in the face of higher raw materials costs.

Margins remain under pressure, however, as the ever increasing raw material costs have kept us from fully restoring our margins, President and Chief Executive Officer Thomas E. Gottwald said. Consequently we continue to pursue price increases for our products.

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