Afton Chemical posted a record $50.1 million operating profit for the quarter ending March 31, up 33 percent from $37.7 million in the year-earlier period. SK Energys lubricants division saw an operating loss of 7.7 billion South Korean won (U.S. $5.7 million) in the first quarter, down from a 24.3 billion won ($18 million) profit in 2008s first quarter.
While lubricant additive profits were flat in the quarter to quarter comparison, fuel additive profits increased due to improvements in our product portfolio, increased market coverage, and stability in market demand in an environment of rapidly declining raw material costs, Thomas Gottwald, president and CEO of New Market, Aftons parent company, said. In addition, lower cost in R&D, sales and administrative, and plant spending, contributed to the profit improvement.
Afton Chemical, NewMarkets petroleum additives segment, had $334.8 million in revenue for the first quarter, down 12 percent from $380.6 million in the year-ago period. The lower sales include a 26 percent reduction in quantities shipped, which Gottwald said were especially weak in the first two months of the quarter.
Gottwald explained that the companys margins are reduced during rapidly rising raw material cost environments and expand somewhat when raw material costs drop. Thoughout the quarter, we have adjusted the sales prices of many of our products to reflect market conditions, he added.
With our petroleum additives products being nondiscretionary to a large degree and vital to the performance of modern machinery, we believe shipping volumes will continue to increase as this destocking process is completed, Gottwald noted. The drop in shipments was almost entirely in the lubricant additives portion of our business.
Richmond, Va.-based NewMarket recorded $28.7 million in overall net income, or $1.88 per share in the first quarter, up 45 percent from $19.8 million in net income, or $1.27 per share, in 2008s first quarter.
SK Energy in its earnings presentation cited a number of factors for its lubricants divisions first quarter operating loss, including reduced margins from a drop in base oil price, inventory valuation loss and decreased lubricants demand due to poor auto sales amid the global economic downtown.
Sales for Seoul-based SK Energys lubricants division reached 267 billion won ($197 million) in the first quarter of 2009, down 16 percent from 318 billion won ($235 million) in the year-earlier period.
SK operates a 21,000 barrel per day refinery in Ulsan, South Korea, where API Group II and III production is targeted at high quality passenger car motor oils.