NewMarket Balances Specialty Materials Growth With Petroleum Additives Headwinds

• NewMarket (NYSE:NEU) is seeing strong momentum in its Specialty Materials segment, helped by the acquisition of Calca Solutions and higher volumes at AMPAC.
• The company is contending with softer conditions and inflation pressures in its core Petroleum Additives business.
• NewMarket is putting capital into technology and capacity expansion while also returning substantial cash to shareholders.

NewMarket, trading at about $592.8, has delivered a 67.3% return over 5 years and 82.1% over 3 years, with an 11.1% gain over the past year. Those longer term gains contrast with a 13.8% decline year to date and an 18.1% drop over the past week. This performance may have investors reassessing how the shift toward Specialty Materials could affect the story.

With Specialty Materials growing in importance and Calca Solutions being integrated, the mix of NewMarket's earnings drivers is changing. As the company continues to invest in technology, capacity and shareholder returns, it may be useful to monitor how cash flows, margins and segment contributions evolve across Petroleum Additives and Specialty Materials.

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For investors, this update reads as a mixed but informative signal. On one side, 2025 sales of US$2.73b and net income of US$418.75m were lower than the prior year, with full year EPS from continuing operations at US$44.44 versus US$48.22. That lines up with the softer Petroleum Additives performance, where shipments and operating profit were weighed down by market softness, lower selling prices and higher unit costs, as well as a higher effective tax rate. On the other side, Specialty Materials is becoming a more visible earnings contributor, helped by the Calca Solutions acquisition and higher volume at AMPAC, and the company is putting money into technology and capacity expansion while returning US$183m through dividends and buybacks and reducing debt by US$88m.

The Risks and Rewards Investors Should Consider

• ⚠️ Reliance on Petroleum Additives, where 2025 sales and operating profit were affected by weaker demand, lower shipments and pricing pressure.
• ⚠️ Higher debt levels have been flagged previously as a risk, even though NewMarket reduced total debt in 2025.
• 🎁 Specialty Materials growth, helped by Calca Solutions and AMPAC volumes, provides a second earnings leg alongside Petroleum Additives.
• 🎁 The company paid US$183m to shareholders through dividends and share repurchases in 2025 and continues to invest in technology and capacity expansion.

What To Watch Going Forward

From here, it is worth tracking whether Specialty Materials can continue to increase its share of profit as new capacity comes online by late 2026, and how that balances any ongoing softness in Petroleum Additives. Keep an eye on shipment trends, unit costs and pricing in Petroleum Additives, as well as cash flow coverage of dividends, buybacks and planned capital spending.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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