Lubrizol Predicts Record Earnings


Lubrizol Corp.s fortunes have taken a turn for the better, spurred in part by customers pre-buying and, one analyst speculated, by an accident at a competitors plant in Asia.

The lubricant additive supplier recently lifted its earnings guidance for the second quarter of 2005 by double-digit rates. In a June 29 statement, the company said it now expects to record net earnings of between 82 cents and 86 cents per share for the three months ended June 30. On April 22, the companys most recent prior prediction, management projected earnings between 68 cents and 73 cents per share.

The Wickliffe, Ohio, company attributed the improvement to higher shipment volumes and lower operating costs. Management speculated that volumes are up partly because of customers that are trying to build inventory ahead of price increases that Lubrizol announced.

A stock analyst at KeyBanc Capital Markets predicted an improvement in Lubrizols performance two weeks before the companys announcement. According to press reports, Saul H. Ludwig changed his recommendation for Lubrizols stock from hold to buy. Ludwig also attributed his upgrade to higher volumes, which he attributed to two factors. The first was pre-buying in the face of Lubrizol price hikes. In addition, he reportedly stated that Lubrizol gained volume in Asia because of a fire at a competitors plant.

Ludwig did not name the competitor, but operations at Chevron Oronites lubricant additive factory in Jurong, Singapore, were interrupted after a flash fire that killed an employee March 9. That plant is the largest lube additive factory in Asia.

At the time of the incident, Oronite said that some operations had been suspended pending an investigation into the cause of the accident and assessment of damage. The company did not respond torequests last week for an update on the status of the plant.

Lubrizol declined to comment on Ludwigs statement about a competitors plant. Lubrizol is scheduled to announce its second quarter results on July 27. Last year the company recorded a profit of 60 cents per share for that period.

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