UpdateUS Ashland takes steps to address guar inventory risks

29 January 2013 15:49  [Source: ICIS news]

HOUSTON (ICIS)--Ashland has taken steps to mitigate risks from its guar inventories, the CEO of the US-based specialty chemicals firm said on Tuesday.

A higher-than-expected $31m (€23m) write down on Ashland’s straight guar inventories contributed to a decline in the company’s fiscal 2013 first-quarter operating income.

"The inventory issue with straight guar is now behind us, and we have taken action to significantly reduce the risks going forward,” CEO James O’Brien told analysts during a webcast briefing on Ashland’s results for the three months ended 31 December 2012.

O’Brien said that Ashland improved supply and commercial agreements and strengthened the supply chain processes to optimise inventory levels, thus reducing inventories from three to one month.

He added that while Ashland was seeing volume declines in more commoditised straight guar, higher technology derivatised guars were doing well, with demand expected to continue to grow.

Guar is a gum used as a controlling agent in oil, natural gas and shale gas drilling. It is part of specialty ingredients, Ashland's largest segment.

For the three months ended 31 December, Ashland's specialty ingredients segment sales were $622m, down 1% year on year and down 8% sequentially from Ashland's fiscal 2012 fourth-quarter ended 30 September, largely because of lower volumes.

However, the weak volumes Ashland saw within parts of its 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, O’Brien added.

($1 = €0.74)

By: Stefan Baumgarten
+1 713 525 2653

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