Quaker Chemical: Profits, plain and simple

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Quaker Chemical Corp. (NYSE:KWR) has spared the rod and spoiled the shareholders, showering them with profits as it pampers the metals industry with rolling lubricants, corrosion preventatives and finishing compounds. Flashy gains aside, this is a small-cap company rooted in simplicity, values as plain as a Quaker’s clothes closet.

Quakers — the company and the believers — are steeped in peace, friendship, individual ideas of God and appreciation of plainness. Headquartered unsurprisingly in Conshohocken, Pa., and founded in 1918, Quaker finally opened up to the world in 1999, deciding then to refashion its organizational structure to meet customer needs. It went global. Now, Quaker has regional headquarters in The Netherlands, Brazil and China.

Globalization has been worth the wait. Many CEOs rap passionately to shareholders about a company’s values, but Quaker CEO Ronald Naples takes it to another plane: he’s got the backbeat of Buddha and the concept of “character is destiny.” In the company’s 2007 annual report, Naples — who is stepping down as CEO in October — notes that by holding its course through tough times in 2004 and 2005, Quaker was able to boldly profit in 2006 and 2007.

“For me, the heart of this company character is captured in something I call the Quandary of the Wish. It’s been my unspoken guide for a long time, and what we’ve become as a company flows from it and the belief, hard work, and commitment of Quaker people all over the world,” Naples wrote to shareholders. He described the quandary as having to deal with the world as it is, not as wished for, but to also be unafraid to act “in a way that will create the tomorrow we want.”

Today is that tomorrow. Quaker reported record sales of $546 million in 2007, up 19% from 2006 and more than double sales in 1999, when the company went global. Increased sales in China and Europe helped, as did higher selling prices, which softened pressure from higher raw material costs. Margins in gross dollars improved but decreased as a percentage of sales as these costs were up from 2006 . . .

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