Ashland Inc. provides fiscal third-quarter update
COVINGTON, Ky. – Ashland Inc. (NYSE:ASH) today provided an update to its fiscal third-quarter outlook. Results for the quarter, which ended June 30, 2007, will include several favorable developments in certain of Ashland’s reserves and cost estimates.
Operating income for the June 2007 quarter will benefit from adjustments of approximately $11 million due to lower pension and other benefit costs. In addition, favorable adjustments to environmental reserves are expected to total approximately $4 million, reflecting updates of future costs based on engineering estimates for identified sites and improvements to the environmental assessment process.
Income from discontinued operations for the June 2007 quarter will include a favorable net adjustment to asbestos reserves and related receivables for insurance recoveries of $16 million, resulting from an updated assessment of future claim costs.
Net income will benefit from an adjustment to Ashland’s income tax rate, as previously disclosed. The tax rate is expected to be roughly 18 percent for the June quarter and 24 percent for the entire fiscal year ending in September.
In addition, excluding the effects of the above adjustments and despite weak earnings from Ashland Distribution, operating income for the June 2007 quarter is expected to substantially exceed the same quarter a year ago. The current-year quarter will benefit from strong Valvoline results and lower corporate costs as compared with the prior-year June quarter. Distribution has experienced both lower margins due to continued weakness in its key North American markets and a full quarter’s impact from the discontinuance of a significant North American plastics supply contract. Distribution’s operating income, excluding its portion of the adjustments, is expected to be roughly half of the $20.1 million reported in the March 2007 quarter. For the year-ago June quarter, Distribution reported income of $30.1 million.
Ashland’s operating income in the prior-year quarter was adversely affected by a $9.7 million loss from Valvoline and the required inclusion in operating expenses of $12.1 million of corporate costs previously allocated to the company’s former APAC subsidiary, partially offset by a $7.6 million foreign currency hedge gain related to an Ashland Water Technologies’ acquisition.
Ashland will announce preliminary results* for the third quarter on July 25, 2007, prior to the opening of the New York Stock Exchange, and will follow with an 8:30 a.m., EDT, conference call and webcast.
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