Blenders’ Earnings Up, Calumet’s Down


Lubricant supplier Fuchs Petrolub reported strong earnings for 2007, and Milacrons Industrial Fluids segment posted positive results for the quarter and year ending Dec. 31. Meanwhile, independent refiner Calumet Specialty Products Partners LP saw earnings slip for the quarter and year. Startup of Calumets Shreveport, La., refinery expansion has been delayed to the second quarter of 2008.

According to preliminary figures released Friday, Fuchs Petrolube AG, the worlds largest independent lubricant manufacturer, reported net profits of 120.3 million (U.S. $178.4 million) for the 2007 financial year, up 23.7 percent from 97.2 million in 2006. Sales revenues for 2007 totaled 1.4 billion, up 3.2 percent from 1.3 billion in 2006.

Mannheim, Germany-based Fuchs said strong cash flow in 2007 allowed the company to buy back 3 percent of its own shares, to pay an attractive dividend and to further strengthen balance sheet ratios.

Fuchs Petrolub AGs executive board has decided, subject to a corresponding decision of the companys supervisory board March 27, to propose for the 2007 financial year a dividend of 1.50 (U.S. $2.22) per preference share and 1.44 per ordinary share to the annual general meeting taking place May 6. For the preference share, it would be equivalent to a 50 percent increase.

Calumet Specialty Products Partners LP reported net income for the quarter ending Dec. 31 of $7.8 million, compared to $32.1 million for the year-earlier period. Sales revenue for the quarter was up 18.4 percent to $436.9 million, compared to $368.7 million in 2006s fourth quarter.

For the entire year, net income was $82.9 million, down 13.2 percent from $95.6 million in 2006. Full-year sales revenue again reached $1.6 billion, as it did in 2006.

The Indianapolis-based company attributed the fourth quarter performance to several factors, including lower gross profit in its specialty products segment. This decrease in gross profit is primarily the result of the rising cost of crude oil outpacing increases in the selling prices per barrel of our specialty products, partially offset by increased specialty products sales volume, the company explained.

Specialty products segment sales volume for the fourth quarter was 21,674 barrels per day, up 5.9 percent from 20,473 b/d for the same period a year earlier. This included 10,578 b/d of lubricating oils in the quarter, down 1.4 percent from 10,729 b/d in 2006s fourth quarter.

Also affecting net income was a decrease of $9.7 million in unrealized gain on derivative instruments. A derivative typically is a contract whose value derives from the value of underlying financial assets such as stocks, bonds, currencies or commodities.

The decreased gain was primarily due to an unfavorable market change related to the ineffective portion of certain derivative instruments designated as cash flow hedges in the fourth quarter of 2007 as compared to the same period in 2006, the company said.

The earnings report included an update on the expansion of its Shreveport refinery, which Calumet expects to add 6,000 b/d of Group II base oil production plus 1,000 b/d of new wax volume. Progress continues on our Shreveport refinery capacity expansion project, which we now expect to be substantially completed in the first quarter of 2008, with production ramping up during the second quarter of 2008, said Bill Grube, Calumets president and chief executive officer.

We now estimate that the total cost of the Shreveport refinery expansion project will be approximately $300 million, an increase of $80 million from our previous estimate, the company said. This increase is primarily due to increased construction labor costs caused by the delay in startup of the project.

Milacrons Industrial Fluids segment, which supplies metalworking and industrial fluids, reported net income of $6.6 million for the fourth quarter, up 61 percent from $4.1 million in the year earlier period. Fourth quarter sales were $31 million, up 6.8 percent from $29 million in 2006s last quarter. The company said earnings rose mainly due to the favorable resolution of product liability claims.

For the full year, quarterly sales for the segment reached $124 million, up 6 percent from $117 million in 2006. Net income improved by 53.7 percent to $16.6 million, up from $10.8 million in 2006. Milacron said the earnings improvement in 2007 reflected improved pricing, greater operating efficiency and lower product liability costs.

Overall, Cincinnati-based Milacron posted a net loss of $73.4 million for the quarter, compared to a $8.6 million net loss in the same period in 2006. The company attributed the drop primarily to a non-cash writedown of deferred tax assets of $63 million associated with the change of ownership of the majority of its preferred stock, as announced in October 2007. The figures also included costs related to curtailment of the companys U.S. pension plan.

Ronald Brown, Milacrons chairman, president and chief executive officer, said the economic outlook for 2008 is mixed. We expect to see continued growth in most of our markets outside of North America, particularly in China, India and other faster-growing economies, Brown said. Due to uncertainty in the automotive and housing sectors, however, we are not anticipating any market growth in North America.

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