COVINGTON — Ashland Inc. said Tuesday it lost $119 million in its first fiscal quarter and plans to cut its work force by 1,300 jobs, freeze wages and adopt a two-week furlough program.
The chemical company blamed the loss in the first quarter on a severance charge, writedown and the acquisition of Hercules Inc. It said the workforce cuts amount to about 9 percent of its staff and will be accomplished by the end of fiscal 2010.
Ashland employs about 800 workers in Lexington in its Valvoline division of lubricants. The company has not specified where cuts will be made, but spokesman Jim Vitak in Lexington said the Valvoline division has been performing well, with same-store sales up 9 percent at its Valvoline Instant Oil Change retail outlets. The company said Tuesday that the job cuts would exclude Valvoline retail employees.
Beginning in February, Valvoline products will be featured at 700 company-owned Goodyear Auto Service Centers and Just Tires stores as part of a new partnership.
A sector where cuts are likely to occur is Ashland Hercules Water Technologies, which combines the former Ashland Water Technologies segment and former Hercules Paper Technologies and Ventures Group. Ashland closed on its $2.4 billion buyout of Hercules last November.
Ashland, which has its headquarters in Covington, said its loss amounted to $1.73 per share for the three months that ended Dec. 31, compared with a profit of $33 million, or 52 cents per share, a year earlier.
Quarterly results included 51 cents per share related to cross-currency swaps, a 45 cents-per-share writedown of auction-rate securities, a severance charge of 29 cents, 37 cents-per-share in one-time-purchase accounting adjustments and some tax items totaling 36 cents per share.
Analysts surveyed by Thomson Reuters expected a profit of 15 cents per share. Analysts' estimates typically exclude one-time items.
"Our newly combined company saw volumes across all of our business segments decrease," Chairman and Chief Executive James J. O'Brien said in a statement.
Revenue grew 3 percent to $1.97 billion from $1.91 billion, with $238 million coming from the Hercules acquisition.
Ashland said it will try to cut costs by $265 million, with about $150 million taking place during fiscal 2009. Salaries will be frozen globally, saving more than $25 million. The company also plans to initiate a two-week furlough for most non-hourly U.S. and Canadian workers. The furlough and some other unspecified job- and benefits-related actions are expected to take place in the next five months, bringing about $25 million in savings. Other cost cutting actions are anticipated to save Ashland $30 million.