Stepan Co., a Northfield-based global manufacturer of specialty and intermediate chemicals, reported a 49 percent drop in earnings partly because pricier soybean oil made the company’s biodiesel production less profitable. 

The company made $3.1 million, or 31 cents per diluted share, in the quarter ended Sept. 30, compared with $6.1 million, or 61 cents per diluted share, in the year-earlier quarter.

The earnings included after-tax charges of nearly $2 million from a contribution to  a deferred compensation account, a plant conversion and a pension plan freeze. A loss of  $800,000 was sustained by a Canadian subsidiary due to the decline in the U.S. dollar.  The year-earlier earnings were augmented by $700,000 in after-tax income from the deferred compensation account and $200,000 foreign exchange gains.  The company records gains and losses in the deferred compensation account as its stock rises and falls.

Sales rose 11.8 percent to $339 million from $303 million a year earlier.   

Sales of surfactants –tension-reducing agents used in cleaning compounds– rose  9.7 percent, but earnings in that sector dropped 8 percent.  The company said increased costs of the soybean oil used to produce biodiesel had much to do with the overall decline in surfactant profitability, stating in a press release that a $3.5 million decline in biodiesel profits “more than offset” what could otherwise have been an upswing in the surfactant sector.  Biodiesel is not a surfactant, but is included in the sector because the chemicals used in the production of both are the same.  

While the company expects to maintain a conservative presence in the biodiesel market, it is also pursuing a possible alternative use for its biodiesel facilities.  “We believe we can make a feedstock for our fabric softener business potentially utilizing this equipment,” stated Vice President of Finance James E. Hurlbutt in a conference call, referring to the company’s existing biodiesel processing equipment. 

Profits from polymer sales dropped by 7 percent due to unforeseen production outages at one plant.  The company has since completed “significant work” on the faulty plant and plans further equipment improvements.

No Wall Street analysts cover the company.

Stepan’s downturn diverged from its profitable year-to-date performance.  In the nine months ended Sept. 30 the company earned $13.5 million, or $1.34 per share, compared with $12.2 million, or $1.23 per share, in the 2006 period.  Sales rose to $987 million from $884 million.

In late afternoon trading the stock traded at $34.64, up 14 cents.