Ashland 3rd-quarter profit falls 28 percent

Chemical company Ashland Inc. said Thursday its fiscal third-quarter profit fell 28 percent despite higher revenue, as raw materials prices continue to rise.

The results topped Wall Street estimates, reporting net income of $72 million, or $1.13 per share, for the three months ended June 30, compared with $100 million, or $1.58 per share in the corresponding period last year.

Revenue rose 11 percent to $2.2 billion from almost $2 billion.

Analysts polled by Thomson Financial forecast earnings of 86 cents per share, on sales of $2.1 billion.

Operating income in Ashland's performance materials unit declined 44 percent to $18.8 million, hurt by weak margins in the composite polymers business, as the North American construction and transportation markets slowed.

The company's distribution division and Valvoline motor oil business benefited from price increases.

The water technologies division more than doubled its operating income to $12.5 million, helped by $5 million from the completion of large sales contracts and bookkeeping adjustments.

The company plans to increase more of its pricing to recover higher raw materials costs. Ashland is also buying specialty chemical business Hercules Inc. in a $2.6 billion cash-and-stock deal that would help it compete in the specialty chemicals market.

Shares fell 31 cents to $41.42 in afternoon trading.

(This version corrects the second paragraph to say results topped Wall Street estimates, not fell short of estimates.)