Afton Chemical's parent company, NewMarket Corporation, last Wednesday released the earnings report of the Companys operations for the third quarter and first nine months of 2016.
Its petroleum additives division, Afton Chemical, operating profit for the third quarter of 2016 was $106.4 million, a 5.8% increase over third quarter operating profit last year of $100.5 million. According to the company, the increase was primarily due to lower raw material and conversion costs, partially offset by decreases in selling prices. Sales for the petroleum additives segment for the third quarter of 2016 were $512.4 million, down 4.4% versus the same period last year, due mainly to changes in selling prices and mix. Shipments between the quarterly periods were flat compared to the same period last year, as the decrease in lubricant additive shipments was offset by an increase in fuel additives shipments. Lower lubricant additives shipments in the North America, Latin America, and European regions were partially offset by an increase in Asia Pacific. North America was the primary driver for the increase in fuel additives shipments.
For the first nine months of the year, operating profit for the petroleum additives segment was $309.3 million compared to $299.6 million for the first nine months of 2015, or an increase of 3.2%. The increase was primarily due to lower raw material and conversion costs, partially offset by decreases in selling prices and shipments. Sales for the first nine months of the year were $1,535 million compared to sales in the first nine months of last year of $1,648 million, or a decrease of 6.9%. This decrease was due mainly to changes in selling prices, mix and lower shipments. Shipments decreased 1.6% between periods, as the decrease in lubricant additives shipments was partially offset by an increase in fuel additives shipments. The regional drivers for those increases and decreases were consistent with the drivers in the third quarter discussed above.
Chairman and Chief Executive Officer, Thomas E. Gottwald, said "We continued to generate solid operating cash flows in the first nine months of 2016. During this period, we paid dividends of $56.9 million, funded capital expenditures of $101.7 million which included the continued investment in our new manufacturing facility in Singapore, and repurchased 98,867 shares of our common stock for a total cost of $35.8 million, or an average cost of $362.25 per share. Also during the period, our cash balance increased $94.5 million while our long-term debt increased by $40.5 million".
"The petroleum additives segment continues to deliver solid operating results. We remain committed to making investments in order to meet our customers ever-changing business needs. We believe the fundamentals of how we run our business - a long term view, safety-first culture, customer-focused solutions, technology-driven product offerings, and world-class supply chain capability - will continue to be beneficial for all our stakeholders" said Gottwald.
NewMarket's net income for the third quarter of 2016 was $71.4 million compared to net income of $62.0 million for the third quarter of 2015. For the first nine months of 2016, net income was $197.8 million compared to net income of $184.7 million for the first nine months of last year. Net income for all periods included the impact of valuing an interest rate swap at fair value. Excluding this item, third quarter 2016 earnings were $71.1 million compared to $64.1 million last year. On the same basis, earnings for the first nine months of this year were $200.7 million compared to $187.4 million last year.
