Ashland investing in capacity, raising prices in ISP integration

Since buying International Specialty Products (ISP) in August Ashland has invested in the production assets it acquired. Ashland is adding capacity for production of polyvinylpyrrolidone, a tablet binder, in Texas, US and has further investments in the pipeline.

“We’ve got several others that we will be communicating during the upcoming quarter. So, we have a very active programme. In total, we think we’ll spend about 50 per cent of the capital budget on the heritage ISP​”, John Panichelle, president of specialty ingredients at Ashland, said.

Panichelle was speaking in a conference call to discuss Ashland’s first quarter results. Operating income at the speciality ingredients increased 200 per cent as ‘significantly better pricing’ and volume gains improved margins.

“Pharma volumes were pretty good​”, Panichelle said. Demand for pharmaceutical products was particularly strong in Europe, Panichelle said, and this contributed to double-digit specialty ingredient volume gains in the quarter.

ISP prices​

Raising prices is still on the agenda at Ashland. In May rising raw material and energy costs prompted ISP to up prices by 10 per cent but Panichella, speaking at an analyst day in November, said further increases are needed for some product lines.

Speaking yesterday David Neuberger, director of investor relations at Ashland, said the company made some pricing progress during the quarter. “Pricing is really an issue that we have delivered on in this quarter​”, Panichella said.

Despite this, there is still “work to do​” to bring ISP prices in line with costs, Neuberger said, and Ashland will continue to monitor the situation. “Raw materials trends remain mixed​”, James O’Brien, CEO of Ashland said, but the “ongoing success​” of price rises means O’Brien is “less concerned​”.