US Ashland’s fourth quarter net income falls 18.3% to $76m

26 October 2010 11:59  [Source: ICIS news]

LONDON (ICIS)--Ashland’s net income for its fiscal fourth quarter fell by 18.3% year on year to $76m (€54.7m) as margins were negatively affected by raw material cost pressures, the US-based chemicals producer and distributor said on Tuesday.

Sales for the quarter ended 30 September increased 13% to $2.38bn, as all of the group’s commercial businesses witnessed volume growth.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter fell to $201m, from $224m in the year-earlier period, and adjusted operating income fell 9.2% year on year to $129m.

"It was a very challenging quarter. Despite double-digit sales growth, raw-material cost pressures continued to temper margins. All of our commercial units did achieve year-over-year volume and sales increases, on a comparable basis, and despite the challenges, Ashland generated just over $200m of EBITDA in the quarter,” said chairman and CEO James O'Brien.

"Our businesses continue to implement price increases, where appropriate, to offset raw material inflation, but as we've said before, it can take, on average, three to four months to fully recover costs. Once raw materials stabilise, our pricing actions should enable margin recovery, as demonstrated by performance materials and distribution in the September quarter," O'Brien said.

Looking ahead, O'Brien said the completion of Ashland’s expansion in Nanjing, China, should help relieve its functional ingredients' capacity constraints and enable the group to capture strong growth and customer demand in China and the surrounding Asia Pacific region.

“As we go into 2011, we are well-positioned as a world-class specialty chemicals company, with a strong balance sheet and ample liquidity to implement our growth strategies,” he added.

($1 = €0.72)

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By: Franco Capaldo
+44 (0)20 8652 3214



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