The company attributed the increase primarily to lower raw material and conversion costs, partially offset by lower shipments. Conversion costs are the manufacturing or production costs necessary to convert raw materials into products. Shipments decreased 1.6 percent between the periods, mainly due to decreases in lubricant additive shipments, with Asia Pacific and Latin America being the primary drivers for the decrease, NewMarket noted in its earnings news release.
Petroleum additives segment revenue slipped 1.8 percent to $550.6 million, down from $560.5 million, due mainly to lower shipments that were partially offset by increased selling prices.
We are encouraged by the strong operating profits results of our petroleum additives business in 2019 compared to last year, though we must acknowledge that our 2018 results were disappointing, NewMarket Chairman Thomas Gottwald stated in the earnings release. Our operations for the previous two years were adversely affected by a challenging economic environment marked by a sustained increase in raw material costs and softening global demand. Gottwald said while the company sees evidence that trend is improving, it will continue to make margin improvement a priority until it sees more stability.
As a whole, Richmond, Virginia-based NewMarket posted net income of $67.8 million, up almost 16 percent from $58.5 million during last years third quarter. Earnings per diluted share increased more than 18 percent to $6.06, up from $5.12.