By Mike Boyer
The Cincinnati Enquirer

COVINGTON - Over the last year, Ashland Inc. has re-invented the way it does business - cut costs and jobs, adopted new operating methods and set new goals.

But chairman James J. O'Brien told investors at the company's 80th annual shareholders meeting Thursday that the job isn't done.

"In 2003, the focus was on changing the way we run the business. In 2004, the focus will be on execution,'' he told investors at the Metropolitan Club.

Ashland, which had $7.5 billion in revenues last year, operates specialty chemical, highway construction and the Valvoline car care businesses. O'Brien, who succeeded Paul Chellgren in October 2002, has replaced most of senior management, eliminated 600 jobs company-wide and put a new focus on accountability.

All of which is aimed at making Ashland a growth company achieving top returns among its competitors, said O'Brien, an Ashland executive since 1977.

While results for the 2003 fiscal year, ended last September, were "disappointing,'' he said, the performance for the fiscal first quarter ended Dec. 31 announced Monday included an 11 percent increase in sales and a 188 percent improvement in operating income.

But O'Brien, in a news conference after the meeting, said the first-quarter results are "only one data point.''

"Things are headed in the right direction; whether they're sustainable, we'll see,'' he said.

One issue boosting the stock is investor speculation over Marathon Oil Co.'s option to buy Ashland's 38 percent stake in their refining and marketing joint venture, Marathon Ashland Petroleum LLC, starting next January. Analysts have estimated that could produce a $2.5 billion windfall for Ashland.

O'Brien said he has no control over what Marathon may or may not do, so he's focusing on improving the performance of Ashland's wholly owned businesses.

O'Brien said he gives Ashland employees an "A'' for the way they've dealt with the changes

"That doesn't mean everything is perfect. It's not,'' he said. "It's been tough on people'' he said, particularly asking a lot of long-time employees to leave the company.

One thing that isn't changing is Ashland's commitment to its headquarters here, which employs about 50.

O'Brien acknowledged that there's been speculation about the future of the Covington corporate office, mainly because he's continued to live in Lexington. His decision to maintain his home in Lexington was a personal choice, he said.

O'Brien said he concurred in the 1999 decision to move the headquarters from Ashland, Ky., to Covington because of its airport access and the Cincinnati area's quality of life.

"It was the right decision then, and it's the right decision now,'' he said.

Email mboyer@enquirer.com