Lubrizol 2Q Profit Falls 5% On Costs, Foreign Exchange, Taxes

   DOW JONES NEWSWIRES 
 

Lubrizol Corp.'s (LZ) second-quarter earnings fell 5% as costs, foreign exchange and taxes weighed on the specialty-chemical company's profitability.

Lubrizol, which makes industrial lubricants as well as additives for engine oils and consumer products, reiterated that it faced disadvantages from higher raw-material and manufacturing costs and added that other expenses, reduced foreign-exchange gains and higher taxes exerted pressure.

However, it again reported improved prices, favorable product mix and better volume, as it did in the prior quarter. It said the latest period's per-share earnings benefited from a lower number of shares outstanding.

Lubrizol is on its way to merging with billionaire Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB), in a deal worth roughly $9 billion. David Sokol, a Berkshire executive who suggested the purchase to Buffett and who was once considered by many to be Buffett's likely successor, resigned because of questions about his purchases of Lubrizol stock before the companies sealed the agreement.

Lubrizol posted a profit of $191.3 million, or $2.90 a share, compared with $201.4 million, or $2.88 a share, a year earlier. The latest results included merger-and-restructuring charges of 1 cent a share. It had 5.3% fewer shares outstanding in the latest period.

Revenue increased 17% to $1.63 billion.

Analysts surveyed by Thomson Reuters expected earnings of $3.06 a share on revenue of $1.51 billion.

Gross margin fell to 30.7% from 33.8%.

Shares closed Tuesday down 2 cents at $134.65. Through the close, the stock has risen 26% so far this year, better than the wider market.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]