29 January 2013 13:56 [Source: ICIS news]
Correction: In the ICIS story headlined “US Ashland Q1 net income up by 66% year on year” dated 29 January 2013, please read in the first paragraph “...Ashland reported a 66% year-on-year increase in net income for the first quarter of the company's fiscal 2013...” instead of “...net income for the first quarter of 2012..." A corrected story follows.
LONDON (ICIS)--Ashland reported a 66% year-on-year increase in net income for the first quarter of the company's fiscal 2013, but the company’s performance was still below expectations for the period, the US-headquartered specialty chemicals producer said on Tuesday.
The company generated $101m (€75m) in net income during the period, up from $61m during the same period in 2011, and bouncing back from a $274m net loss during the previous quarter, which had been driven by pension losses and debt refinancing, the company said.
Operating income fell by 18% year on year to $163m, and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 11% to $268m over the same period. Net sales were steady year on year at $1.9bn.
"Our financial performance in the first quarter – which is Ashland's seasonally weakest period of the year – reflects soft demand in some key markets and regions. It also includes $31m in losses on straight guar, primarily reflecting a discrete write-down of inventory to current market value," said Ashland CEO James J O’Brien.
“While our first-quarter financial results did not meet our expectations, we believe the biggest issues affecting our performance have been addressed,” he added.
EBITDA for Ashland’s specialty ingredients division fell by 28% year on year to $116m, driven by weak demand and the $31m straight guar loss.
The division’s pharmaceutical, hair and oral care and non-guar energy and specialty businesses all generated profit increases during the period.
The company’s performance materials business also noted a 38% decline in EBITDA to $28m as a result of lower elastomers margins.
Ashland’s water technologies subsidiary posted a 15% decline in quarterly EBITDA year on year to $34m, due to soft demand for water treatment technologies.
Consumer markets operations performed better, with the division posting a 34% increase in EBITDA to $75m.
Despite issues with straight guar sales and margins for some products, Ashland’s targets for the year remain unchanged, according to O’Brien.
He said: “The inventory issue with straight guar is now behind us, and we have taken action to significantly reduce the risks going forward. In addition, the weak volumes we saw within certain parts of our specialty ingredients business in December appear to have been short-term, as order patterns through the first four weeks of January have improved to more normalised levels.
"Looking ahead, our strategic focus has not changed. We remain committed to achieving our fiscal 2013 objectives, which should put us in a good position to attain our 2014 overall financial targets and generate significant value for our shareholders.”
($1 = €0.74)
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