Officials at Ashland Inc. declined to comment on a published report that the firm is looking to sell its distribution unit, which includes one of North America's largest resin distribution businesses.
According to an Aug. 12 story from Reuters news service, Ashland has hired Bank of America to advise on the possible sale of the distribution unit.
The story anonymously quoted “several sources familiar with the matter.” An Ashland spokesman said the firm does not comment on market rumors.
Based on sales, Ashland's Dublin, Ohio-based distribution business ranked as the largest of the firm's five operating units in the first nine months of 2010. Distribution generated sales of $2.5 billion in that period, representing about 37 percent of total sales and showing an increase of almost 12 percent vs. the same period in 2009.
But in operating income, distribution placed only fourth among Ashland's five units for the nine-month period. Its $39 million operating income figure was down 11 percent from the year-ago period and represented less than 9 percent of Ashland's total operating income.
The distribution unit's overall sales and volume in pounds both have dropped significantly since peaking at $4.4 billion and 4.8 billion pounds in Ashland's 2008 fiscal year. For fiscal 2009, distribution sales fell more than 30 percent to $3 billion and volume fell almost 23 percent to 3.7 billion pounds.
For the 12-month period ended March 31, Ashland had distribution sales of $3.1 billion and volume of 3.7 billion pounds, according to data presented in June by Ashland Distribution President Bob Craycraft at an Analyst Day event in New York. During that 12-month period, 41 percent of Ashland's distribution sales came from plastics. Within the business, plastics' market share trailed only chemicals, which had a 47 percent share.
Distribution's pretax profit for Ashland peaked at $141 million in fiscal 2006, but has been no higher than $84 million in the three complete fiscal years since then. Craycraft said at the event that supplier rationalization has led the unit to exit significant high-volume, low-margin business.
The unit's resin suppliers include Sabic Innovative Plastics, LyondellBasell Industries, BASF Corp., ExxonMobil Chemical and Borealis. It operates from 132 warehouses in North America and 14 in Europe, and has its own private fleet of trucks, tankers and trailers that includes a total of almost 1,000 vehicles.