Unit Sale Greases Ashland Profit

Earnings from continuing operations, however, decline amid weakness at Valvoline.
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posted a big jump in fiscal fourth-quarter earnings, boosted by gains related to its recently sold paving unit, but earnings from continuing operations declined amid weakness at the company's Valvoline division.

The chemical company posted net income of $200 million, or $2.82 a share, for the quarter ended Sept. 30. A year earlier, earnings were $111 million, or $1.48 a share.

Excluding results from Ashland Paving and Construction, which was sold during the quarter for $1.3 billion, earnings from continuing operations dropped to $56 million, or 79 cents a share, from $30 million, or $1.08 a share, last year. Analysts surveyed by Thomson First Call expected earnings of 54 cents a share on this basis.

Ashland's revenue climbed to $1.93 billion from $1.71 billion last year. Analysts, on average, predicted revenue of $1.97 billion.

"I'm generally pleased with our September quarter results," said James J. O'Brien, Ashland chairman and chief executive. "While there are many items that impacted our results, our businesses performed well with the exception of Valvoline."

The company's Valvoline segment recorded an operating loss of $14.6 million in the quarter, compared with a year-ago operating profit of $10.3 million. Sales increased 12% to $379 million, but the motor oil concern's bottom line was weighed down by a $4.4 million asset impairment charge and a $1.7 million in severance costs. In addition, margins were hurt by higher costs for base lube oil, additives and packaging.

Ashland said it expects Valvoline to return to profitability in the December quarter.

Meanwhile, Ashland's performance materials division increased its operating income 19% to $17.8 million in the fourth quarter. The company's water technologies division reported operating income of $4.9 million, up from $2 million a year earlier.

Separately, Ashland announced a deal to acquire Northwest Coatings, a Wisconsin-based maker of adhesives and coatings using ultraviolet and electron beam polymerization technology. The transaction is valued at about $72 million.

Shares of Ashland recently were up 67 cents, or 1.2%, to $58.09.