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Ashland (ASH) to Initiate Strategic Review of Certain Assets

Ashland Global Holdings Inc.ASH will explore strategic alternatives for its Composites segment, as well as for the butanediol (BDO) manufacturing facility in Marl, Germany, and associated merchant Intermediates and Solvents (I&S) products.

This move is in sync with Ashland's vision of creating a premier specialty chemicals company. The company intends to consider all options with respect to the above assets, including a potential sale. The company plans to use the proceeds from the potential sale of these assets for debt reduction and share repurchases. It also intends to eliminate stranded costs from the possible assets sale.

The company expects good financing availability, low interest rates, a healthy macroeconomic environment and the benefits of the latest tax reform to create a supportive backdrop for a potential sale of these assets. If the company eventually decides to divest the assets, it would expect to sign an agreement by 2018.

With this, the company will have a more streamlined portfolio focused on specialty ingredients that will further improve margins and enhance shareholders value.

However, Ashland plans to retain its BDO plant in Lima, OH, to ensure consistent supply for its internal needs.

Shares of Ashland have moved up 9.1% over the past six months, outperforming the industry 's 3.7% gain.

Ashland missed earnings and sales estimates in first-quarter fiscal 2018 (ended Dec 31, 2017). In the quarter, the company's adjusted earnings came in at 46 cents per share, trailing the Zacks Consensus Estimate of 47 cents.

Revenues increased roughly 19.6% year over year to $842 million in the quarter. The figure, however, lagged the Zacks Consensus Estimate of $860 million.

For fiscal 2018, Ashland updated its adjusted earnings outlook to a range of $2.90-$3.10 per share owing to changes in the company's effective tax rate. Also, the company raised effective tax rate expectation for the fiscal as a result of the recently enacted tax reform. This, in turn, is expected to reduce fiscal 2018 adjusted earnings by roughly 30 cents per share.

For second-quarter fiscal 2018, Ashland projects adjusted earnings in the range of 80-90 cents per share compared with 70 cents in the prior-year period. The company expects the benefit of pricing actions to be partly offset, in the fiscal second quarter, by the impact of the planned maintenance shutdown in the Marl, Germany, facility.

Ashland Global Holdings Inc. Price and Consensus

Ashland Global Holdings Inc. Price and Consensus | Ashland Global Holdings Inc. Quote

Zacks Rank & Stocks to Consider

Ashland currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the chemical space are LyondellBasell Industries N.V. LYB , Kronos Worldwide Inc. KRO and BASF SE BASFY .

LyondellBasell has an expected long-term earnings growth rate of 9% and sports a Zacks Rank #1(Strong Buy). The company's shares have moved up 26.2% in a year. You can see the complete list of today's Zacks #1 Rank stocks here .

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1. Its shares have gained 52% over a year.

BASF has an expected long-term earnings growth rate of 6.7% and carries a Zacks Rank #2 (Buy). Its shares have moved up 8.6% in a year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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