Petroleum additives shipment for the fourth quarter of 2015 declined by 4.3% from the same period last year, according to NewMarket Corp., parent of global additive maker Afton Chemical, based in Richmond, Va. This decline, which represents the lowest level of quarterly shipments in three years, was primarily due to a drop in lubricant and fuel additives shipments in North America, the company said.
For the full year of 2015, petroleum additive shipments declined by 1.2% compared to 2014, with increases in fuel additive shipments, primarily in North America, offset by declines in lubricant additives in all regions, except Latin America.
“Shipments were below our expectations for both the quarter and full year periods, as demand for lubricant products trended lower in the face of a continued general weakness in the global economy. In addition, we believe the rapid decline in crude oil prices in the fourth quarter may have led some customers to reduce stock levels in anticipation of lower base oil prices,” the company said in a statement.
Sales for the petroleum additives segment for the fourth quarter of 2015 were USD476.7 million, down 13.0% versus the same period last year. For the year, petroleum additives sales were USD 2,125 million compared to sales in 2014 of USD 2,325 million, a decrease of 8.6%. NewMarket Corp. attributed this decline to foreign currency exchange, changes in selling prices and mix.
Operating profit for petroleum additives for 2015 declined 2.6% to USD 374.9 million, compared to USD 385.1 million for 2014. Changes in foreign currency overshadowed strong operating performance in the Americas and, to a lesser extent, the Asia-Pacific region, the company said. The decline in operating profit was also due to increases in research and development investments and lower sales volume, partially offset by lower raw material costs, it said.
“Unfavorable exchange rates and softer industry demand have worked against us at a time when we have a great need to invest in developing products to meet new, upcoming specifications and pursue specific growth opportunities,” the parent company said.
Nonetheless, for the full year of 2015, NewMarket Corp. reported a 2% rise in net income of USD 238.6 million, or USD 19.45 per share, compared to net income of USD 233.3 million, or USD 18.38 per share, for 2014.
“Our business continues to generate strong cash flows,” the company said.
“Our increased investments in 2015, evidenced by our more than USD 125 million of capital expenditures and 14% higher spending in research and development, reinforces that we are making decisions to promote the greatest long term value for our shareholders and customers, and we remain focused on our long term objectives.”
Meanwhile, NewMarket Corp. said that it expects to begin commercial production at its new additives manufacturing facility in Singapore by mid-year.
“In August, we announced the second phase of construction which will include additional component production units. Phase two will more than double our investment in the Singapore facility and is scheduled to be completed in 2017,” the company said.