Chemical groups suffer from second half slowdown

A mixed Q3 was the verdict for the additive and chemical majors.

Despite a general economic and market slowdownin the second half of the year, Germany's Fuchs Petrolub recorded an 11% increase in sales revenues over the same period of the previous year at €1.4bn (US$1.8bn) against €1.2bn.

At €224 million, earnings rose by 12% year-on-year with Fuchs forecasting a 10% improvement for a year as a whole, providing there are no major economic suprises before the year end and is looking at a final €264m ($336m) figure.

Meanwhile, profits are up but revenue down for NewMarket's Afton Chemical additives division. With a third quarter operating profit of $96.3 million, Afton posted a Q3 improvement of 15% year-on-year and a 20% increase for the whole nine months against over the same period in 2011 on profits of $300.4 million.  The figures exclude last year's gain as a result of a legal settlement.

Sales for the quarter were slightly down, however, at $547.7m from $552m, although year-to-date sales are still up by 4% overall at almost $1.7bn, while shipments for Q3 quarter essentially remained flat.

The good news is that Afton has reduced its debt burden through strong cash flow, taking more than $99m off its borrowings since the start of 2012, with cash at hand increasing to $29.3 million.

Another cash-rich company in the sector is Calumet Specialty Products with distributable cash flow for the third quarter of $92.5m as compared to $50.5m for the same period last year.

During the period, Calumet completed the acquisition of Montana Refining Company in a $184m deal mainly funded with cash and some borrowings under its revolving credit facility.  Calumet’s net income for Q3 2012 was $42.4m, a significant improvement on the $19.6m generated in same period in 2011.