Ashland Q1 op income down 21% on US housing

28 January 2008 15:52  [Source: ICIS news]

HOUSTON (ICIS news)--Ashland reported an operating income of $46m (€31m) for the quarter ended 31 December 2007, down 21% year on year from $58m on the downturn in US housing, the US base oils and specialty chemicals producer said on Thursday.

"The unfavourable conditions in the North American building and construction and transportation markets continued to negatively affect our results," according to a statement by CEO James O'Brien.

Overall, net income for the quarter, the first in its financial year, was $33m, down 33% from $49m for the same period in 2006, the company said.

Sales in the quarter were $1.9bn, up from $1.8bn reported for the same time in 2006. Cost of sales were $1.6bn, up from $1.5bn reported for the corresponding quarter in 2006.

By segment, Ashland's performance materials reported an operating income of $12m for the quarter, down from $26m reported during the same time in 2006 on lower capacity utilisation in North America.

In addition, many of its performance materials are used in circuit breakers, plastic pipes and other materials consumed by the housing industry, Ashland said in a conference call.

The company's distribution segment reported an operating income of $6m for the quarter, down from $14m reported for the same time last year.

Coatings make up a large part of the segment's business, which dragged down performance due to the US housing slowdown.

Ashland's base oils segment Valvoline reported an operating income of $20m, up from $18m reported for the same quarter in 2006.

Ashland attributed Valvoline's performance to a shift towards premium oil changes, which now represent more than half of all of the changes at the segment's centres.

Water technologies reported an operating income of $5m, unchanged from the same time in 2006, the company said. Ashland said higher expenses and lower margins in the segment offset the higher revenues.

O'Brien said the company's distribution segment has since improved following its lacklustre performance in the last three months of 2007.

The performance materials segment should be insulated from the full effect of  US downturn due to its premium product line and its presence in foreign markets, O'Brien said.

The water technologies segment is generally less exposed to recession, he said.

($1 = €0.68)
By: Al Greenwood
+1 713 525 2653

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