Oil’s Drop Spurs a Rise At Quaker

Article Excerpt

QUAKER CHEMICAL CORP. $20 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) makes lubricants and specialty chemicals that protect industrial machinery from rust and other forms of corrosion. Major customers include steel producers, automotive companies and appliance makers. The company needs crude oil to make its products. Although it passes along most of its higher costs to its customers, the steady rise in oil prices over the past few months has squeezed its profit margins. Quaker hedges some of its oil needs, but these contracts typically last for less than one year. Quaker is now starting to see some of the benefits from its 2005 restructuring plan. In the second quarter of 2006, it earned $0.30 a share (total $3.0 million), up 66.7% from $0.18 a share ($1.8 million) a year earlier. Revenue grew 10.9%, to $118.7 million from $107.0 million. The company gets roughly 55% of its revenue from overseas customers. Spreading industrialization in China and Brazil…

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