July 25th, 2010
Ashland profits triple. Distribution sales up one third
Ashland profits triple. Distribution sales up one third: Reuters 25.07.10 Ernest Scheyder
*Revenue up 16 percent to $2.36 bln
* Distribution unit sales up 32.2 percent
* CEO sees gradual economic growth
* Shares up 3.5 percent
By Ernest Scheyder
NEW YORK, July 23 (Reuters) - Ashland Inc (ASH.N), the chemical maker and Valvoline brand owner, said on Friday its quarterly profit nearly tripled, news that sent shares up 3.5 percent. The company not only produces a wide range of chemicals, including industrial glues, but distributes chemicals for its rivals. Its results typically offer a key barometer on the health of the overall chemical industry and by extension, the broader economy.
"As we consider the next few quarters, we anticipate sustained, gradual growth of the overall economy," Ashland Chief Executive Officer James O'Brien said. "We continue to see growth in both volume and sales." While raw material prices were high during the period, they hit a plateau in June, executives said on a conference call with investors. Ashland's plants operated at 83 percent capacity during the period. That's low considering both the rebounding economy and time of year, and executives said they're working to bolster the number. Margin pressure in the company's iconic Valvoline unit may offset strength elsewhere, though Ashland operating leverage should help overall results as the economy improves, Jefferies & Co analyst Laurence Alexander said.
BY THE NUMBERS
For the third quarter ended on June 30, Ashland posted net income of $148 million, or $1.85 per share, compared with $50 million, or 66 cents per share, a year earlier. Excluding one-time items, including a tax benefit, the company earned $1.22 per share. By that measure, analysts expected earnings of $1.13, according to Thomson Reuters I/B/E/S. Revenue rose 16 percent to $2.36 billion. Analysts expected $2.30 billion.
The Covington, Kentucky-based company said the busy summer driving season helped fuel a 5 percent jump in sales at the consumer markets unit, which contains the Valvoline oil change business.
Across the company, sales rose at three of its five units, with sales falling only slightly at the functional ingredients unit, which makes chemicals for paint, food and medical uses, and the water technologies unit, which supplies materials used in wastewater treatment. Sales at the chemical distribution unit rose 32.2 percent.
Shares rose $1.75, or 3.5 percent, to $51.23 in morning trading. The stock has traded between $26.66 and $63.73 in the past 52 weeks. (Reporting by Ernest Scheyder; Editing by Lisa Von Ahn, Derek Caney, Phil Berlowitz)