Lubrizol said Monday that its Lubricant Additives segment had revenue of $515 million for the quarter ended Sept. 30, up 16 percent from the same period of 2003. The improvement stemmed from a 10 percent increase in shipment volume, plus better price and product mix and more favorable currency exchange rates. Volume grew by 5 percent in North America, 16 percent in Europe and 20 percent in Asia-Pacific.

Those trends were partially offset by a 10 percent rise in raw material costs, but the segment succeeded in slicing expenses for selling, testing, administration and research by 2 percent. The bottom line was operating income of $67 million, compared to $48.2 million during the third quarter of last year. The acquisition of Noveon International helped boost overall corporate earnings to $32.2 million, up from $24.3 million in the year-ago period.

The Wickliffe, Ohio, company said it was pleased with the results but that recovery of raw material cost increases will be a key to continued success.

Margin improvement remains a difficult challenge and our highest priority in light of continued rising raw material costs, Lubrizol President and Chief Executive Officer James L. Hambrick said. All of our commercial teams are fully committed to implementing needed price increases – and we have already implemented some as high as 30 percent. For many products, we have implemented three rounds of price increases this year, and we have already announced additional price increases that take effect beginning in November to address the continued rise in certain raw material costs.

Afton (formerly Ethyl Petroleum Additives) also enjoyed healthy sales growth – 15 percent to $223 million, according to parent company NewMarket Corp. The segments operating earnings, however, dropped to $8.6 million, down from $16.5 million in the third quarter of 2003. Officials of the Richmond, Va., company said most of the blame lay with raw material costs.

As crude oil remains at record highs and the cost of many of our purchased chemicals remain equally high due to their own supply-demand situations, our price increases have not been sufficient to cover these cost increases, President and Chief Executive Officer Thomas E. Teddy Gottwald said. We are currently in the process of raising prices, but expect continuing margin pressure in the fourth quarter. Research, development and testing cost are also higher for the nine months and third quarter 2004 in support of new product specifications, our growth success, and our continuing commitment to enhance the value of our products to our customers.

Quaker Chemicals net sales rose 11 percent to $100 million thanks to growth in North and South America, better exchange rates and acquisitions. Net income slid from $4.1 million to $1.2 million, driven down by raw materials costs and higher expenses for selling and administration.

Needless to say, our third quarter earnings are very disappointing, Chairman and Chief Executive Officer Ronald J. Naples said. We did a fine job on the revenue line, even in the face of weakening demand in some of our steel markets, but were unable to turn that into the earnings progress we expected. The size and speed of raw material cost increases accelerated considerably in the third quarter, particularly crude oil, and outpaced the effect of the pricing actions we had underway.

But the Conshohocken, Pa., company said it remains optimistic about its long-term prospects. Naples said Quaker has grown its market share and that this will eventually lead profits upward again. Were in a very tough period right now, he said.