Layoffs offset drop in Ashland revenue

Ashland Inc. announced second-quarter earnings on Thursday that saw revenue decline in many of its businesses but benefited from a strong series of cost reductions that have seen more than 1,000 employees leave the company.

The Covington-based company received a boost from its November acquisition of Hercules Inc., which provides water treatments in the pulp and paper business and creates ingredients for food and pharmaceuticals.

Net income in the quarter was $48 million, or 65 cents a share.

Operating income for the quarter was $134 million.

Had Ashland owned the company at the same time a year ago, revenue would have fallen 24 percent year-over-year to $1.99 billion, but operating revenue would have been up 25 percent from a figure of $107 million.

Volumes declined between 10 percent and 40 percent throughout its businesses, but chairman and chief executive James J. O'Brien emphasized that the company already has seen nearly $60 million of its projected $130 million in annual savings from acquiring Hercules.

Some of those savings have come from eliminating job redundancies between the two companies. Ashland has also instituted a furlough program, in which employees must take two unpaid weeks off by the end of June.

The company has about 800 employees at its Lexington campus, which includes Valvoline operations.

"We are encouraged by Ashland's results for the March 2009 quarter in light of the significantly depressed demand environment," O'Brien said in a statement.

Its Consumer Markets division, of which Valvoline is a part, saw revenue increase 1 percent year-over-year as average selling prices were higher.

Lubricant volume, though, fell by 10 percent, primarily because of declines in private-label sales volumes. The company said margins increased because of cost-saving initiatives and lower raw material costs during the quarter.