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Lubrizol’s turnover and earnings up as Noveon integration progresses well

By Liz White, UT contributing editorCleveland, Ohio-Lubrizol Corp., which recently added the chemicals business of Noveon International Inc. to its lubricant activities, has announced third quarter revenues some 80 percent above those in the same period of 2003. The firm is pleased with progress in integrating the new business, said James Hambrick, president and chief executive officer, while also emphasising the effects of surging raw materials costs on margins, and the importance of continuing to implement price increases for its products.”Our excellent third-quarter results reflect continued strong demand for lubricant additives along with solid performance and successful integration of our acquisitions-particularly Noveon,” said Hambrick, in the firm’s results statement. He added that the first quarter with Noveon-which makes Estane-brand thermoplastic polyurethanes and coatings resins-“has exceeded our expectations,” and cited good progress in integrating the organisations and gaining synergies. Lubrizol is progressing well towards a cost savings target of $40 million a year: $18 million a year has been achieved and a further $13-15 million identified, Hambrick said. “On a stand-alone basis, Noveon results for the quarter were significantly stronger than the third quarter of 2003, thanks to the focus and continuity of Noveon management,” Hambrick said, concluding that, “Overall the new Lubrizol is coming together very well.”Lubrizol attributed its earnings rise to, “higher shipment volume, acquisitions and improved price and product mix, which were partially offset by higher raw material costs and a higher tax rate.”Hambrick stressed the effects of these rising raw materials costs and the importance of passing them on to customers. “Margin improvement remains a difficult challenge and our highest priority in light of continued rising raw material costs,” he said. The business is “fully committed to implementing needed price increases-and we have already implemented some as high as 30 percent,” Hambrick continued, adding that “For many products, we have implemented three rounds of price increases this year, and … announced additional price increases,” for November-“to address the continued rise in certain raw material costs.” Hambrick also pointed out that, “availability of raw materials is also a growing concern affecting the chemical industry.” But he added that this “does not appear to be threatening demand or supply for our products in the foreseeable future.” Lubrizol’s consolidated earnings for the quarter ended 30 Sept 2004 were $32.2 million ($24.3 million for Q3 2003) or $0.61 per share. These figures included a pre-tax restructuring charge of $10.5 million for integrating Noveon. Consolidated revenues for Lubrizol for the quarter were $922.6 million ($509.9 million for Q3 2003). Excluding acquisitions, revenues increased 14 percent. Cash flow from operations of $96.3 million was 39 percent up over the same period of 2003.”



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