Tuesday, October 26, 2004

Record earnings at Ashland Inc.



By Mike Boyer
Enquirer staff writer

Covington-based Ashland Inc. reported record fourth-quarter earnings Monday driven by the performance at its highway construction and chemical distribution businesses.

Shares in Ashland closed at $54.96, down $1.40, after its chief financial officer said it was unlikely Ashland would close on the sale of its stake in Marathon Ashland Petroleum by Dec. 31.

Ashland, which has agreed to sell its 38 percent stake in Marathon Ashland Petroleum to partner Marathon Oil for $3 billion, said it is continuing to work on the transaction. But CFO Marvin Quin said it is more likely that the deal will be completed in early 2005.

One of the conditions of the sale is a favorable tax treatment from the Internal Revenue Service. Ashland said it is continuing to discuss the issues with the IRS and exploring alternatives to resolve the issues. But Quin said a minimal level of taxation would not end the deal.

Net income for the three months ended Sept. 30 was $200 million, or $2.76 a share, up from $137 million, or $1.99 a share, in the fourth quarter a year ago.

The latest quarter was well ahead of analysts' expectations of $1.62 a share for the chemical, auto care products, highway construction and oil marketing and refining company.

Fourth-quarter revenues rose to $2.5 billion from $2.28 billion a year ago.

"Our fourth-quarter results demonstrate our ability to leverage opportunities in an improving economy and to grow our businesses organically while lowering our cost," chairman and CEO James J. O'Brien said.

For the year, Ashland reported net income of $378 million, or $5.31 a share, well ahead of the prior year's net income of $75 million, or $1.10 a share. Full-year revenue rose to $8.7 billion from $7.9 billion a year ago.

Despite crude oil prices that rose 34 percent in the fourth quarter, Ashland said MAP's operating earnings increased to $151 million, up 28 percent over the prior year's $118 million.

For the full year, MAP's operating earnings were $383 million, up from $263 million in the prior year.

Atlanta-based Ashland Paving and Construction Inc., reported record quarterly earnings of $70 million compared with a $3 million loss a year ago. For the year, APAC reported operating earnings of $111 million compared with a $42 million loss in the prior year.

Ashland Distribution also reported record fourth-quarter earnings of $23 million, versus earnings of $5 million a year ago. For the year, distribution's operating earnings were $78 million - also a record - compared with $32 million in the previous year.

Ashland Specialty Chemical had fourth-quarter operating earnings of $24 million, compared with $10 million a year ago. For the year, specialty chemical reported operating earnings of $87 million versus $31 million in the previous year.

Lexington-based Valvoline reported slightly lower fourth-quarter operating earnings of $30 million, versus $31 million a year ago, reflecting the closing of two South American subsidiaries. For the year, Valvoline's operating earnings were a record $105 million compared with $87 million in the previous year.

NS Group Inc.

The Newport-based parent of Newport Steel Corp. reported record earnings and revenues for the three months ended Sept. 30, driven by strong demand for its tubular steel products.

Third-quarter net income was $24.7 million, or $1.14 a share, compared with a net loss of $2.2 million, or 11 cents a share, in the same period last year. Net sales rose 66 percent to $122.1 million from $73.6 million a year ago. The third quarter was ahead of analyst expectations of $1 a share.

The latest period was also ahead of second-quarter net income of $20.6 million, or 96 cents a share, on revenue of $109.4 million.

"The outlook continues to be good," CEO Rene J. Robichaud said. "Oil and natural gas prices are near record levels."

NS Group said steel prices will remain high in the fourth quarter, but pricing for its welded and seamless pipe should also remain strong.

Shares in NS Group closed at $17.59, up 68 cents.

E-mail mboyer@enquirer.com



BUSINESS HEADLINES
As Ohio struggles, candidates offer ideas on economy
No deal reported with pilots
Pilots' chief says salaries not main woe
Home sales dip slightly
Contract agreement can't stop drop in Kroger stock
Record earnings at Ashland Inc.
Forest Park honors firms
Business summary
Business digest

TECH TUESDAY
eCabinet system helps streamline small offices
Tips for buying digital camcorders