Quaker Chemical 2025 Q2 Earnings Misses Targets as Net Income Plummets 290.7%

Quaker Chemical (KWR) reported its fiscal 2025 Q2 earnings on July 31, 2025. The company's results fell short of expectations, primarily due to a substantial goodwill impairment charge in the EMEA segment. Despite a 4.3% increase in sales to $483.40 million, the company reported a significant net loss of $66.56 million, or $3.78 per share, compared to net income in the previous year. Looking ahead, Quaker Chemical maintains its guidance, expecting full-year 2025 revenue and earnings to align with 2024 levels. However, current economic conditions pose challenges to this outlook.

Revenue
For the second quarter of 2025, Quaker Chemical saw a 4.3% increase in total revenue, reaching $483.40 million, compared to $463.57 million in the same period the previous year. The company's revenue was bolstered by its Customer Industries segment, which accounted for the entire $483.40 million. Within this, the Metals segment generated $154.96 million, while the Metalworking and other sectors contributed $328.44 million to the overall revenue.

Earnings/Net Income
Quaker Chemical reported a net loss of $3.78 per share in 2025 Q2, a significant decline from a profit of $1.94 per share in 2024 Q2. This reflects a 290.7% decrease in net income, shifting from a profit of $34.91 million to a loss of $66.56 million. The earnings report highlights a substantial financial setback.

Post-Earnings Price Action Review
In the wake of Quaker Chemical's earnings report, a strategic approach of purchasing shares on the date of the revenue announcement and maintaining them for 30 days has historically yielded moderate returns. While this strategy capitalized on post-earnings momentum, the returns were limited by broader market volatility. Despite some recovery tendencies, the stock's rebound rate was slower compared to the market, aligning with historical patterns. Over the past three years, this approach resulted in an average positive return of about 5%, reflecting the stock's behavior following earnings disappointments or market corrections. The strategy underscored Quaker Chemical's tendency to recover from dips, albeit at a slower pace than the S&P 500, offering steady, low-risk returns but not high-risk, high-reward opportunities.

CEO Commentary
Joe Berquist, Chief Executive Officer and President, remarked, “Quaker Houghton executed well in the second quarter of 2025. We generated 2% year-over-year organic volume growth in the quarter, delivering above-market growth due to strong new business wins across all segments. The momentum in our Asia/Pacific segment continued, generating 8% organic volume growth compared to the prior year. I am proud of how the team adapted to the challenging macroeconomic environment, particularly in the U.S. and Europe, while maintaining a clear focus on our customers. We also made progress in the quarter advancing our enterprise strategy while effectively managing costs.”

Guidance
The company expects economic conditions to remain tepid in the second half of 2025, with meaningful opportunities to gain profitable new business. Actions initiated are anticipated to deliver approximately $20 million of additional run-rate cost savings by the end of 2026. The company guides for stronger performance in the second half, positioning for full-year 2025 revenue and earnings to align with 2024 levels, supported by a strong balance sheet and consistent cash flow generation to create shareholder value.

Additional News
Within three weeks following the earnings announcement, Quaker Chemical has been active in enhancing shareholder value and corporate strategy. The company announced a 5% increase in its quarterly cash dividend to $0.508 per share, reflecting robust cash flow generation and commitment to shareholders. Additionally, Quaker Chemical completed its acquisition of Dipsol Chemicals, a strategic move to strengthen its industrial process fluids portfolio, particularly in the Asia-Pacific region. This acquisition, funded through existing credit facilities, aims to enhance cross-selling opportunities and customer service capabilities. The company also successfully repurchased $32.7 million in shares, demonstrating its ongoing dedication to returning capital to shareholders.