Ashland Inks Deal to Sell Avoca Business to Optimize Portfolio

Ashland Inc. ASH announced that it has signed a definitive agreement to sell its Avoca business to Mane. ASH disclosed that it is reviewing strategic alternatives for the underperforming Avoca business line. This is in sync with ASH’s efforts to optimize its portfolio, focus on core operations and improve margins.

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Avoca supplies Sclareolide, a fragrance fixative and a range of contract manufacturing capabilities. It has two production facilities in North Carolina and Wisconsin. Ashland had acquired Avoca business line part of the Pharmachem acquisition.

Ashland noted that the Avoca business remained challenged over the past few quarters as customers have moved from plant-based to lower-cost bio-based materials. The company recently exited as an unprofitable tolling operation at Avoca and had reduced workforce at a larger facility in response to lower demand.

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The transaction is expected to close in the first quarter of 2025.

For fiscal 2025, Ashland expects sales to be in the range of $1.90 billion to $2.05 billion and adjusted EBITDA to be in the range of $430 million to $470 million. ASH expects to grow volumes in fiscal 2025 to offset increased pricing competition.

The ASH stock has plunged 15.1% in the past year compared with the 20.6% decline in the industry.

Image Source: Zacks Investment Research

ASH currently carries a Zacks Rank #4 (Sell).

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Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, CF Industries Holdings, Inc. CF and ICL Group Ltd ICL. While CRS sports a Zacks Rank #1 (Strong Buy) at present, CF and ICL carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology’s current-year earnings is pegged at $6.74 per share. CRS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched once, with the average surprise being 14.1%. The company’s shares have gained 141% in the past year.

The Zacks Consensus Estimate for CF Industries’ current year earnings is pegged at $6.36 per share. CF surpassed the Zacks Consensus Estimate twice in the trailing four quarters and missed the rest, with an average earnings surprise of 10.3%. The stock has gained 6.6% in the past year.

The Zacks Consensus Estimate for ICL’s current-year earnings is pegged at 35 cents. ICL’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 18.1%.

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