ABOUT THIS COMPANY

ABOUT THIS COMPANY

Best known for its refining and marketing operations (Marathon Ashland Petroleum), Ashland Inc. has diversified into chemicals, automotive products, highway construction, and chemicals and plastic distribution. Some of the company's more popular consumer brands include Valvoline motor oils and Zerex antifreeze. Based in Covington, Ky., the company employs more than 25,000 people and has customers in over 140 countries.

Kentucky born and bred

Ashland's predecessor was a Kentucky-based oil and gas exploration concern called Swiss Oil Co. In 1924, Swiss Oil changed its name to Ashland Refining Co. after buying a refinery near Ashland, Ky. In the late 1940s, the company embarked on an ambitious acquisition plan, buying up or merging with a string of small oil companies, refineries and pipelines. In the 1960s, the firm diversified into chemicals and retail marketing and expanded overseas. Ashland's reputation was tarnished in the 1970s by two separate events: First, the company's CEO admitted making illegal political donations to Richard Nixon's presidential campaign. Then, the company was investigated for making questionable payments to Middle Eastern governments.

1990s expansion

Ashland spent the 1990s concentrating on expansion. In 1991, the company nearly tripled its domestic crude oil collection capacity when it merged with the Scurlock Oil Company and purchased Permian Corporation. A year later, Ashland Chemical purchased most of Unocal's chemical distribution business and two companies that produce chemicals for the semiconductor industry. In 1995, the company changed its name from Ashland Oil (which had been adopted in 1970) to Ashland Inc. to reflect the diverse nature of its business.

Shaking things up

Paul Chellgren, hired as CEO in 1996, initiated a major restructuring that began with the merging of Arch Mineral and Ashland Coal to form Arch Coal (the company sold its remaining stake in the unit in 2000). The company then sold off its oil and natural gas exploration division, Blazer Energy. In 1998, Ashland and Marathon Oil combined their refinery and marketing subsidiaries to create Marathon Ashland Petroleum (MAP), in which Ashland holds a 38 percent stake. Ashland also made administrative changes, relocating its headquarters from Ashland, Ky. to Covington, Ky. in July 1998. Covington is not only near Cincinnati's international airport, but it also is centrally located among Ashland's major operations.

Environmental record

In October 1998, the company agreed to spend more than $32.5 million in connection with violations of pollution control laws. Ashland was charged with violating five environmental acts - including the Clean Air Act, the Clean Water Act and the Toxic Substance Control Act - at refineries in Kentucky, Minnesota and Ohio. The money was used to pay civil penalties, to correct the violations, and to fund environmental projects, such as air monitoring and the restoration of 274 acres of prairie grass in Minnesota.

Banner results

Ashland's fiscal 2001, which ended in September 2001, was the company's best year ever. The company reported record profits for the year as strength in its MAP and Valvoline divisions more than offset profit declines in its highway construction and chemical businesses. Ashland also improved its balance sheet by paying down $355 million in debt.

Things change quickly

By March 2002, things had changed dramatically for Ashland. Declining margins in the company's joint marketing and refining business (MAP) resulted in that unit's first quarterly net loss. Those weak results, coupled with the sluggish economy, led to a net loss in overall income during the company's fiscal second quarter. Although CEO Chellgren said he expected marketing and refining margins to improve during the summer, he said the company's fiscal 2002 earnings will likely be significantly lower than the record results achieved in fiscal 2001.

Paving the day

In August 2006, Ashland agreed to sell its Ashland Paving and Construction subsidiary to Oldcastle Materials Inc. for about $1.3 billion. Proceeds from the sale will allow Ashland to pump more into its stock repurchase program, as well as refocus the company on what it sees as its four critical chemical businesses: performance materials, distribution, water technologies and Valvoline.