- Petroleum Additives Second Quarter Shipments Strong, Margins Compressed
- First Half Net Income of $121.7 Million and Earnings Per Share of $11.13
- Petroleum Additives First Half Operating Profit of $168.3 Million
NewMarket Corporation Chairman and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the Company’s operations for the second quarter and first half of 2021.
Net income for the second quarter of 2021 was $52.0 million, or $4.75 per share, compared to net income of $22.3 million, or $2.05 per share, for the second quarter of 2020. Results for the second quarter of 2020 were severely impacted by the COVID-19 pandemic and the resulting government restrictions on the movement of people, goods and services to combat the spread of the virus in its early stages. For the first half of 2021, net income was $121.7 million, or $11.13 per share, compared to $107.9 million or $9.78 per share, for the first half of last year.
Sales for the petroleum additives segment for the second quarter of 2021 were $586.6 million, up from $408.7 million in the second quarter of 2020. Petroleum additives operating profit for the second quarter of 2021 was $74.2 million, compared to $33.1 million for the same period last year. The increase was due to higher shipments, lower conversion costs and favorable changes in selling prices, partially offset by higher raw material costs. Shipments increased 41.1% between periods, driven by increases in all world regions in both lubricant additives and fuel additives. Petroleum additives operating margin for the second quarter of 2021 was 12.7%, significantly lower than our historical average.
Petroleum additives sales for the first half of the year were $1.2 billion compared to sales in the first half of last year of $966.1 million. Petroleum additives operating profit for the first half of the year was $168.3 million compared to $146.7 million for the first half of 2020. The increase was due to higher shipments and lower conversion costs, partially offset by higher raw material costs. Shipments increased 19.1% between periods, due to increases in lubricant additives shipments. Fuel additives shipments were relatively flat between periods.
We are encouraged by our petroleum additives operating results and the strong shipments for the first half of 2021, but disappointed with our operating margins. Our product shipments for the first half of 2021 are the highest since the first half of 2018. However, we are seeing downward pressure on our operating margins due mainly to the steady increase in raw material costs throughout the year. While our efforts have been focused on recovering these cost increases, we have been experiencing the lag between when price increases go into effect and when margins start to improve. Margin improvement will continue to be a priority until we see margins consistently within our historical ranges.
During the first half of 2021, we funded capital expenditures of $44.4 million, and paid dividends of $41.5 million. In March 2021, we issued $400 million 2.70% senior notes that are due in 2031.
We remain focused on the long-term success of our company, including emphasis on satisfying customer needs, generating solid operating results, and promoting the greatest long-term value for our shareholders, customers and employees. We believe the fundamentals of how we run our business – a long-term view, safety and people first culture, customer-focused solutions, technology-driven product offerings, and a world-class supply chain capability – will continue to be beneficial for all our stakeholders.