A Mixed Bag of Q2 Results


Ashland’s Valvoline division, Lubrizols additives segment, Fuchs Petrolub AG and Quaker Chemical reported a mixed bag of financial results for the quarter ending March 31.

Ashlands Valvoline division reported first quarter operating income of $66 million, a 175 percent jump from $24 million in the year-earlier period. Raw material cost decreases, along with cost savings initiatives, strengthened gross margins, Ashland said. The company noted that selling, general and administrative expenses declined 12 percent in the quarter, compared to 2008s first quarter, further contributing to Valvolines record performance in the quarter.

Valvoline posted $407 million in sales, up 1 percent from $401 million in the year-earlier period. The company noted that average selling prices were above the year-ago quarter.

Lubricant volume decreased by 10 percent, to 37.7 million gallons in the first quarter, compared to 42.1 million gallons in 2008s first quarter. Ashland attributed the decrease primarily to declines in private-label sales volumes, which moderated as the quarter progressed.

A New York Post article April 24 reported that Ashland began shopping the Valvoline division to pay down debt, and speculated it could fetch as much as $1 billion. Ashland has declined to comment on the report, and the topic did not come up during a conference call with analysts on Thursday.

Covington, Ky.-based Ashland on a whole reported operating income of $112 million on revenues of $2 billion for the first quarter.

Lubrizols additives segment reported operating income of $118.7 million in the first quarter, up 1.6 percent from $116.8 million in the year-earlier period. The change reflected effective margin management initiatives and reductions in spending, the company said.

The Wickliffe, Ohio-based company said its additives segment reported $727.8 million in revenue for the first quarter, down 14 percent from 2008s first quarter. The company attributed the decrease in revenues to lower volume and an unfavorable currency impact, which more than offset an improvement in price and product mix.

The magnitude of the volume decline was the same across all geographic regions and was attributable to ongoing economic weakness and continued inventory destocking, Lubrizol said.

Lubrizol CEO James Hambrick said consolidated volume grew steadily through the first quarter after a very week December 2008. Year-over-year volume declines in the additives and the advanced materials segments were in line with the companys expectations, he noted, and we project this will be our weakest volume quarter for the year.

As a whole, Lubrizol reported operating income of $64.2 million on revenues of $1 billion, or 95 cents per diluted share.

Fuchs Petrolub AG said it was unable to defy the recession in the first quarter of 2009 and, like the global lubricants market, recorded a significant drop in demand. The Mannheim, Germany-based lubricants supplier reported net profit of 16.2 million (U.S. $21.6 million) for the first quarter, down nearly 50 percent from 32.1 million in the year-earlier quarter. The company reported sales revenues of 278.5 million ($372 million), down 20.6 percent from 350.7 million in 2008s first quarter.

The company has 3,730 employees worldwide as of March 31, 125 fewer than at the start of this year. The drop in staff numbers in all regions is a reflection of the initial measures taken to adapt to the considerable decline in the groups global sales revenues, Fuchs stated.

There are currently no indications that a significant improvement in the economic situation, and therefore in the demand for lubricants, is to take place, the company continued. Fuchs said measures taken to secure its earning power and prepare for the future include both expanding and securing profitable revenue sources and continuing strict cost management, while at the same time paying increasing attention to the cash flow. The lubricant supplier noted it will also continue investment in the specialty business, research and development, and growth market.

Quaker Chemical
Quaker Chemical posted a $272,000 operating loss, compared to a $9.1 million operating profit in 2008s first quarter.

Conshohocken, Pa.-based Quakers first quarter sales reached $98.5 million, down 33.3 percent from $147.7 million in 2008s first quarter. The company said the decrease was due primarily to volume declines in all of Quakers regions and market segments, as the global economic downturn continued to impact the company. Volumes were down about 32 percent, which the company said was partially offset by a favorable 4 percent increase in selling price and mix.

The company previously announced an additional restructuring program in the first quarter, including provisions for severance for 60 employees totaling $2.3 million. The fourth quarter 2008 program included elimination of more than 80 positions.

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