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Ashland Declares Force Majeure in Europe Post Fire Outbreak

Ashland Global Holdings Inc. ASH declared a force majeure in Europe on 1.4 butanediol (BDO), formaldehyde and tetrahydrofuran (THF). The decision to shut down production facilities at its manufacturing facility in Marl, Germany, came after a fire broke out on Aug 10.  

Ashland announced that the production has been suspended while an inquiry into the cause and extent of the fire has been initiated. Presently, the Marl facility is unable to produce any THF, 1.4 BDO or formaldehyde and this is expected to reduce the availability of these products significantly.

However, the company is working with customers who have been affected from this incident and is trying to minimize the impact to their respective businesses. Ashland will also continue to provide updates concerning its supply capabilities.

Ashland reported a net loss from continuing operations of $16 million or 26 cents per share in the third quarter of fiscal 2017 (ended Jun 30), against a net income of $24 million or 38 cents in the year-ago period. Barring one-time items, adjusted earnings were 83 cents per share which beat the Zacks Consensus Estimate of 70 cents.

Revenues increased roughly 10% year-over-year to $870 million. The figure beat the Zacks Consensus Estimate of $839.3 million.

According to Ashland, the Specialty Ingredients unit recorded a 7% year-over-year increase in revenues while the sales of Composites grew by 20% on the back of disciplined pricing and robust volume expansion in various global end markets. Intermediates and Solvents unit also witnessed a 9% increase in sales owing to continued recovery in butanediol pricing and improving global demand.

Ashland, which is among the prominent specialty chemicals makers along with Ferro Corporation FOE, American Vanguard Corporation AVD and Kraton Corporation KRA, successfully separated its Valvoline business in May. The company has also closed the acquisition of Pharmachem Laboratories, Inc., a leading provider of quality ingredients to wellness and health industries and high-value differentiated products including flavor and fragrance houses. The acquisition was a key contributor to Ashland’s sales in the third quarter. The company expects to achieve meaningful cost synergies from leveraging combined capabilities along with tax synergies resulting from Pharmachem integration.
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