US Lubrizol to beat recession on stable demand

08 February 2008 21:58  [Source: ICIS news]

HOUSTON (ICIS news)--US specialty chemicals producer Lubrizol said on Friday that it would successfully endure a recession due to the nature of its core lubricant-additives business, which made up 64% of the company's 2006 revenues.

"What we do talk to investors a lot about is the stable demand that we see in the majority of our product lines," said Charles Cooley, chief financial officer.

Since motor oils and other lubricants are inexpensive maintenance products, demand should remain relatively unchanged during a US recession, he said.

As it is, Lubrizol expects that economic conditions in the first months of 2008 should resemble those at the end of 2007, Cooley said.

Cooley made his comments during a conference call, which followed the release of the company's fourth-quarter earnings. Operating profits for the quarter rose 252% year on year, with much of the increase due to the company's additives business.

For 2008, Asia-Pacific and Latin America should continue to drive growth for the company's additives segment and its smaller advanced materials segment, which accounted for 36% of its revenues in 2006, Lubrizol said.

For advanced materials, sales volumes should grow by 5%, with international growth more than offsetting slower US growth, Cooley said.

The increase would follow a disappointing fourth quarter, according to the company.

The advanced-materials segment includes the company's business unit for performance coatings, which struggled as a result of the US declines in textiles and housing, said James Hambrick, chief executive officer.

Engineered materials - another unit within advanced materials - was also dragged down by US housing, Hambrick said. Engineered materials includes Lubrizol's TempRite chlorinated polyvinyl chloride (CPVC) resins, used in plumbing.

The third business unit within advanced materials, consumer specialties, performed well in the fourth quarter, Hambrick said. Consumer specialties include products used in personal care, home care and pharmaceutical applications.

Shares of Lurizol were trading at $57.00 (€39.33) on Friday, up 8.63%.

($1.00 = €0.69)

 


By: Al Greenwood
+1 713 525 2645



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