Profits Down at Quaker Chemical, Flat at Milacron


Industrial lubricants suppliers were challenged in 2005 by steep increases in costs of raw materials, according to financial results that two companies released last week. Quaker Chemical Corp. said its net income for 2005 was down 81 percent from 2004 because of cost increases and a less favorable mix of products sold. Meanwhile, Milacron said the bottom line for its Industrial Fluids segment was essentially unchanged for largely the same reasons.

Quaker Chemical announced Feb. 21 that it had net income of $1.7 million last year, down from $9 million in 2004. Sales revenue jumped 6 percent to $424 million. Two-thirds of the increase was due to higher prices, the company said, one-third to more favorable currency exchange rates. Volumes climbed in the Asia-Pacific region but fell in North America and Europe.

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The Conshohocken, Pa., company provides chemical specialty products and chemical management services, mostly to the steel and auto industries.

Management said it raised its own prices but not enough to keep up with costs of raw materials. This, along with unfavorable product and regional mix, was blamed for eroding margins. The bottom line also took a hit from one-time charges of $10.3 million before taxes for restructuring, which more than offset a $4.2 million gain from a property sale.

Officials said the company will face challenges in 2006 similar to those encountered last year, but they maintained it is better prepared for them now.

We continue our business building initiatives, such as tube and pipe, chemical management services, and market development in Asia-Pacific, particularly China, and anticipate that these initiatives in combination with continued pricing efforts with our customers will enable substantial gross margin improvement in 2006, assuming a stable raw material cost situation, Chairman and Chief Executive Officer Ronald J. Naples said.

Milacron said Friday that its Industrial Fluids segment earned $9.1 million in 2005, compared to $9.2 million in 2004. Sales revenues rose 2.8 percent to $112 million. Management said improved pricing and operating efficiency made up for higher costs of materials and increased expenses for pensions and regulatory compliance. Milacron is based in Cincinnati.

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