Lubrizol, Valvoline Up; SK Down


Lubrizols additives segment and Ashlands Valvoline division reported lower sales but hefty increases in operating income for the quarter ending Sept. 30, while the lubricant division at SK Energy saw a decline in both, compared to the year-ago quarter.

Lubrizols additives segment on Thursday reported operating income of $256.5 million for the third quarter, up 151.2 percent from $102.1 million in 2008s third quarter.

Additives and advanced materials generated very strong results in the quarter as both segments continued to deliver valued technology to customers while also managing margins and controlling discretionary expenses, said Lubrizol CEO James Hambrick. We anticipated potential earnings upside from improved sequential volumes, and both segments did benefit from higher than expected shipments.

The Wickliffe, Ohio-based manufacturer said additive revenues declined almost 5 percent to $914.5 million in the third quarter, from $961.9 million in the year-earlier period.

Lubrizols overall net income for the third quarter reached $170.5 million, on revenues of $1.3 billion, or $2.46 per diluted share. That was up from net income of $63.2 million, on revenues of $1.4 billion, or 92 cents per diluted share, in the year-earlier quarter.

Parent company Ashland said Valvoline reported operating income of $72 million for the three months ending Sept. 30 (the fourth quarter of Ashlands fiscal year), up almost 454 percent from $13 million for the same period a year earlier. Valvolines sales and operating revenues for the quarter reached $414 million, down 8.8 percent from a year earlier.

The company stated that while total lubricant volume decreased by 3 percent versus the prior-year quarter, primarily due to lower private-label sales, U.S. branded-lubricants volume increased 3 percent. Gross profit improved to 35.5 percent of sales in the September 2009 quarter, driven by a combination of pricing actions that began in 2008, lower raw materials costs in the quarter, cost-savings initiatives and a continued shift in mix toward sales of premium brands, Ashland noted. Same-store sales at Valvoline Instant Oil Change in the fourth quarter increased 7 percent over the year-earlier quarter.

For its fiscal year ending Sept. 30, Valvoline had operating income of $252 million, up 203.6 percent from $83 million for fiscal year 2008. Valvolines sales and operating revenue for 2009 was virtually unchanged at $1.7 billion, compared to the previous year.

Covington, Ky.-based Ashland as a whole reported operating income of $133 million million on revenues of $2.1 billion in the quarter. For the fiscal year, Ashlands net income totaled $390 million on $8.1 billion in revenues.

Seoul-based SK Energys lubricants division reported a 33 percent loss in operating profit for the three months ending Sept. 30, to 45.5 billion South Korean won (U.S. $38.4 million), down from 67.7 billion won ($57.1 million) during the year-earlier period.

Revenue for SKs lubricants segment dropped 34 percent to 386.4 billion won ($325.8 million) in the third quarter, down from 589.1 billion won ($496.8 million) a year earlier.

The company said it expected to see continued earnings improvement from rising base oil prices and increasing automobile demand.

SK noted that future earnings from the lubricants business will be reflected as equity method gains, with the establishment of the SK Lubricants spin-off having become effective Oct. 1.

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