Marine fuel additives supplier The
Lubrizol Corporation has announced that its consolidated earnings for the second quarter ended June 30, 2008 were $78.1 million, or $1.13 per share, including after-tax restructuring and impairment charges of $9.1 million, or $.13 per share, primarily related to the closure and realignment of North American production facilities.
Comparable earnings for the second quarter of 2007 were $81.0 million, or $1.15 per share, which included after-tax restructuring and impairment charges of $.6 million, or $.01 per share.
Excluding the restructuring and impairment charges in both periods, adjusted earnings were $87.2 million, or $1.26 per share, for the second quarter of 2008 compared with $81.6 million, or $1.16 per share, for the second quarter of 2007.
Commenting on the results, CEO
James Hambrick said “I am pleased with our solid second quarter and first half performance considering the economic and competitive challenges that we faced. We have been able to maintain our earnings momentum during a time of rapidly rising material costs and very high production rates, demonstrating excellent commercial and operational execution.”
Adjusted earnings per share for the second quarter of 2008 increased by 9 percent compared with the prior-year second quarter largely due to an improvement in the combination of price and product mix, increased volume, a favorable currency impact and a contribution from the 2007 refrigeration lubricants acquisition. These positive factors to earnings more than offset the impact of higher raw material costs, higher manufacturing costs and an increase in the effective tax rate.
For the first six months of 2008, consolidated revenues increased 16 percent to $2.58 billion compared with $2.23 billion for the first six months of 2007. Consolidated earnings were $151.7 million, or $2.19 per share, including after-tax restructuring and impairment charges of $12.1 million, or $.17 per share.
Earnings for the first six months of 2007 were $152.3 million, or $2.17 per share, including after-tax restructuring and impairment credits of $1.1 million, or $.02 per share. Excluding the restructuring and impairment charges and credits from the respective periods, earnings of $2.36 per share in the first half of 2008 increased by 10 percent compared with $2.15 per share in the first half of 2007.
In the second quarter of 2008, Lubrizol Additives segment revenues of $924 million were 22 percent higher than the second quarter of 2007. Compared with the year-earlier quarter, revenue growth resulted from a 9 percent volume increase, an 8 percent improvement in the combination of price and product mix and a favorable currency impact of 5 percent.
Included in these factors was the incremental impact from the 2007 refrigeration lubricants acquisition, which contributed 3 percent to revenues in the quarter. The volume increase was attributable to strong demand in international markets, which more than offset a decline in North America, where volume was unfavorably impacted primarily by order patterns, the introduction of more concentrated products and some demand slowdown.
Lubrizol Additives operating income increased by 10 percent to $117 million in the second quarter of 2008 compared with the second quarter of 2007, primarily as a result of an improvement in the combination of price and product mix, higher volume, favorable currency and a contribution from the refrigeration lubricants acquisition. These positive factors partially were offset by higher raw material and operating costs.
“Lubrizol Additives’ performance was exceptional this quarter,” noted Hambrick. “Overall volume growth and the associated operating leverage drove superior results. Volume demand in developing regions continued to be very strong and our global presence has us well-positioned.
Also, despite an extremely challenging raw material environment, we continued our efforts to recover these costs on a timely basis. Most importantly, the critical element of our continuing performance has been the segment’s focus on helping our customers succeed around the world through our very reliable supply of products, innovative technologies and services.”
The company updated its guidance for earnings that was issued on May 2nd. The company’s new guidance range for 2008 earnings is $4.20 to $4.35 per share, including restructuring and impairment charges of $.23 per share. These charges are associated with the closure of an Additives blending facility in Canada and improvement initiatives associated with its Performance Coatings business.
Excluding the restructuring and impairment charges from both years, the company now projects increased adjusted earnings for 2008 in the range of $4.43 to $4.58 per diluted share, or approximately 9 to 13 percent higher compared with the 2007 adjusted earnings of $4.06 per diluted share.
Regarding the earnings outlook, Hambrick stated, ”At this halfway point in the year, I am convinced we will outpace our earlier full-year projections. These are challenging times and our organization is being tested. Given the character of our leaders and employees, I am confident we will deliver our fifth consecutive year of strong earnings growth.”
