US Lubrizol forecasts 2011 volume growth of 4-5%

02 February 2011 19:27  [Source: ICIS news]

TORONTO (ICIS)--Lubrizol expects volume growth of 4-5% in 2011, coming after a double-digit volume rebound in 2010, executives with the US-based specialty chemicals firm said on Wednesday.

Lubrizol’s additives business was expected to increase volumes by “a more normal” 2-3% this year, with growth being driven primarily by Asia, the executives said during the company’s 2010 fourth-quarter results conference call.

Lubrizol’s advanced materials segment was expected to increase volumes by about 6%, a projection that did not include the recent acquisition of Nalco’s performance products group, they said.

CEO James Hambrick said Lubrizol’s overall 2011 volume growth forecast was “the summation of a whole lot of relatively modest but good news across the economy and across our product lines,” rather than the result of a single factor.

Lubrizol earlier on Wednesday reported a 17% increase in fourth-quarter net income, to $157m (€113m) from $134m in the same three-month period in 2009, as a result of higher volumes and prices.

Asked about passing on rising raw material costs - in particular for base oil - to customers, Hambrick said that Lubrizol’s product pricing was an “artful choreography”.

While Lubrizol’s primary objective was to remain profitable, it also needed to ensure that its customers were profitable amid rising crude oil prices, he said.

“It’s always an artful choreography on our part, as hydrocarbon [prices] rise - and we all need to pass those through - in terms of how far out we look, how far behind we might lag, when we might lead, when me might led our customers lead,” he said.

Lubrizol, in its pricing, was generally not operating under long-term contracts, Hambrick said.

Like other hydrocarbon-based chemicals producers, Lubrizol was exposed to the swings in crude oil prices, he added.

In the 2010 fourth-quarter, raw material costs in Lubrizol’s additives business rose 13% year-on-year, the sixth consecutive quarter of increases. The company responded in January when it announced a global price increase in its additives business, for implementation in mid-February.

Asked about additional acquisitions after the Nalco deal, Hambrick said Lubrizol was working “on a number of things,” but he did not disclose details.

Lubrizol’s 2011 earnings per share guidance was in the range of $11.05 to $11.55, reflecting an increase of 12% to 17% from 2010 adjusted earnings per share of $9.91. The 2011 guidance includes the impact of share repurchases.

($1 = €0.72)

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By: Stefan Baumgarten
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