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TOP CONTRIBUTORS

NewMarket (NYSE: NEU) is a company that works in the petroleum industry. The Company has two segments: petroleum additives, which manufactures specialty chemicals for oil production,[1] and real estate development, which leases office buildings.[2] The subsidiaries of the company include Afton, Ethyl, NewMarket Services, and NewMarket Development. Major shifts in the external environment include the increasing obsolescence of leaded gasoline and the severely fluctuating oil prices.

Business Growth

The major source of growth from 2009 to 2010 was twofold: increases in Afton sales and higher total product shipments, primarily lubricant additives. Sale prices were also up over the previous year, strengthening revenues. Net income grew due to the strength of a recovering market and lower operating costs.

Trends and Forces

Leaded Gasoline Is Becoming Obsolete

NewMarket's Ethyl subsidiary still produces leaded gasoline with tetraehtyl lead in the U.S. and international markets, but sales of leaded gasoline have dropped to less than 1% of NewMarket's overall revenues. As a result, the company plans to discontinue its Ethyl segment in the future as leaded gasoline is becoming obsolete.

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Competition

NewMarket competes with chemical companies that produce petroleum additives used to improve the performance of gas, diesel, and other fuels and as a lubricant in motor oil, fluids, and grease.

  • Lubrizol (LZ) Lubrizol is a chemical company that produces additives used for engine oils, specialty lubricants, metalworking fluids, over-the-counter pharmaceutical products, and medical products. It focuses on the industries of construction, sporting goods, medical products, and automotives.[3]
  • Innospec (IOSP) Innospec is a company that manufactures fuel additives, personal care, and fragrance products. With its three business segments - Fuel Specialties, Active Chemicals and Octane Additives - the company focuses on the household, industrial, and fragrance markets.[4]
  • BASF (LON:BFA) BASF is a company that offers chemical products for the chemical, electronic, constructional, automotive, and agricultural industries. NewMarket most directly competes with BASF in its Oil & Gas segment. [5]

References

  1. NEU 2010 10-K pg. 6  
  2. NEU 2010 10-K pg. 7  
  3. Hoover's LZ
  4. Hoover's IOSP
  5. Hoover's BASF
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