Lubrizol Corp. reported Thursday that third quarter operating income for its Lubricant Additives segment rose 4 percent from the same period of 2004, as price increases allowed the business to offset impacts from Hurricane Rita.
The lube additives segment posted operating income of $68.6 million for the three months ended Sept. 30, up from $66 million in the year-ago period. Revenues climbed 13 percent to $574.1 million, primarily because of price hikes and more favorable sales mix. Shipment volumes were up 1 percent.
Management said Rita exerted a $6 million drag on the segments performance. Two Houston-area factories avoided damage and sustained only brief, precautionary shutdowns, but the company lost $3 million of gross profit on products that did not ship during the quarter and incurred an equal amount of higher manufacturing expense.
Lubrizol said it was able to overcome the impact from the hurricane, as well as continued cost increases for raw materials, by raising prices on its own products multiple times. Officials said the company has worked to shorten the lag between increases in its costs and markups on its own products. It has already announced additional hikes for the fourth quarter.
Chief Executive Officer, President and Board Chairman James L. Hambrick said the company has done a good job of securing raw materials even as availability tightened.
Security of supply has become a more significant issue and we continue to prove our capabilities in this area with our customers, he said.