Lubrizol

Disclosure constraint

Lubrizol publishes no income statement, balance sheet or cash-flow statement. Berkshire discloses only (a) Lubrizol revenue rounded to $0.1B, (b) the percentage change in Lubrizol pre-tax earnings, and (c) qualitative drivers.

The following are not publicly disclosed: gross profit, operating income, EBITDA, absolute pre-tax income, net income, EPS, dividends per share (no public shareholders), margins in absolute terms, total assets, cash, debt, equity, goodwill and intangibles, working capital, operating cash flow, capex, free cash flow, dividends paid to Berkshire, buybacks (not applicable), ROE, ROA, ROIC, liquidity and leverage ratios, interest coverage, asset turnover, and cash conversion cycle.

Disclosed and derived annual metrics

Notes and sources:

• FY2021 revenue is derived from the FY2022 growth rate. FY2021 YoY cells are 0 because no comparable figure is available.

• FY2023 pre-tax was "relatively unchanged" vs FY2022 and is entered as 0% change. FY2024 revenue was "relatively unchanged" and is entered as 0%.

• The FY2024 and FY2025 recovery cells are entered as 0 because no recoveries were reported in the sources reviewed; this is not a confirmed zero.

• Sources: BRK 10-K FY2022 (+48.6% pre-tax; FY2021 losses and impairments of $257M; FY2021 recoveries $55M), BRK 10-K FY2023 (recoveries $11M in 2023 and $242M in 2022), BRK 10-K FY2024 (+30.7%), BRK 10-K FY2025 (−20.6%).

Revenue CAGR FY2021–FY2025: (derived): (6.2 / 6.5)^(1/4) − 1 ≈ −1.2% per year. Using the reported FY2022 base, FY2022–FY2025 CAGR ≈ −2.5% per year.

Quarterly trajectory (most recent eight-plus quarters)

Sources: BRK 10-Q Q1 2024, Q2 2024, Q3 2024, Q1 2025, Q2 2025, Q3 2025, Q1 2026, Q2 2026. Year-to-date figures: 9M 2025 revenue $4.75B (−3.7%) with pre-tax −13.8%; H1 2026 revenue $3.4B (+7.0%) with pre-tax +16.5%.

Implied Q4 2025 (derived): revenue ≈ $1.45B (FY $6.2B less 9M $4.75B). Full-year pre-tax fell 20.6% while 9M pre-tax fell only 13.8%, so Q4 2025 pre-tax must have fallen far more steeply year-on-year. This is consistent with Berkshire's attribution of FY2025 weakness to "restructuring costs related to exiting certain businesses and litigation expenses". The timing fits the 31 Dec 2025 Elmendorf divestiture.

Commentary on trends, inflections and drivers

FY2021 (trough of operational disruption). Earnings were hit by the February 2021 Texas winter-storm shutdowns of Additives plants, the June 2021 Chemtool fire, and impairment charges on an underperforming Advanced Materials business. Total fire-related losses and asset impairments were $257M, partly offset by $55M of insurance recoveries (BRK 10-K FY2022).

FY2022 (inflationary pricing plus insurance). Revenue rose 3.2% to $6.7B on price increases. Volumes were constrained by raw-material shortages and unplanned maintenance. Pre-tax earnings jumped 48.6%, flattered by $242M of insurance recoveries for the Rouen and Rockton fires.

FY2023 (destocking). Revenue fell about 4% to $6.4B on a 7.9% volume decline from general market weakness and customer inventory reduction, plus adverse FX, partly offset by higher prices. Reported pre-tax earnings were flat. Excluding insurance recoveries, underlying earnings rose on price, mix and lower raw-material costs (BRK 10-K FY2023 via Lube Report).

FY2024 (margin peak). Revenue was flat at $6.4B. Volumes rose about 4% but selling prices fell as raw-material pass-throughs reversed. Pre-tax earnings rose 30.7% on lower raw-material costs, higher volumes and lower manufacturing costs. This was a classic additives "spread expansion" year, with input costs falling faster than contractual prices.

FY2025 (spread compression and restructuring). Revenue fell 3.0% to $6.2B on lower prices, lower volumes and unfavorable mix. Pre-tax earnings fell 20.6% on lower prices and volumes, higher manufacturing costs, restructuring costs for exiting businesses, and litigation expenses, partly offset by lower raw materials, lower SG&A and favorable mix. The year includes the French dispersant-unit restructuring attempt, the Elmendorf sale, and HQ consolidation planning.

H1 2026 (inflection up). Q2 2026 revenue rose 11.1% to $1.8B, the strongest quarterly growth in the disclosed series. H1 pre-tax rose 16.5%. Berkshire's Q2 2026 10-Q summary reviewed here did not detail the drivers. Plausible contributors include easy comparisons against restructuring-affected 2025, new capacity (Vilayat CPVC, Avon Lake TPU) and GF-7 / China D1 spec-driven mix. These drivers are analyst inference, not company-confirmed.

Margin estimate (not disclosed). Berkshire reports a group-level pre-tax margin for Industrial Products (18.3% in FY2025; 19.3% in H1 2026), but this blends PCC, Lubrizol, IMC, Marmon and others. A Lubrizol-specific margin is not publicly disclosed. For context, the French National Assembly question of March 2025 cited a Lubrizol European profit margin of "6 to 7%", a politically sourced, Europe-only figure that should not be generalized.

Management guidance and consensus

Management guidance: None published. Berkshire provides no forward guidance for Lubrizol. Its FY2025 commentary on Industrial Products is backward-looking.

Consensus: Not available. No sell-side coverage of Lubrizol as a standalone entity.

Bull case

1. Earnings recovery is underway. Pre-tax earnings turned positive in Q1 2026 (+8.1%) and accelerated in Q2 2026 (+23.4%), with revenue up 11.1%. FY2025 restructuring and litigation costs, plus the Elmendorf exit, create easy comparisons for H2 2026.

2. India is a real second engine. At about 10% of revenue, growing local CPVC resin and compounding capacity (Vilayat/Dahej), medical manufacturing (Chennai), and R&D/GCC investment, India could become Lubrizol's largest growth contributor.

3. Additives oligopoly economics endure longer than feared. Global vehicle-parc aging, hybrids (which still need engine oil), tougher specifications (GF-7, China D1, HD cycles) and Lubrizol's push for approval-based quality favor the technology leader. FY2024's +30.7% pre-tax shows the earnings power when spreads align.

Bear case

1. Structural volume erosion. Lubrizol France's more than 30% volume decline and the abandoned restructuring leave stranded European capacity. BEV adoption and Chinese competitors compress long-run additives growth.

2. Execution and safety risk. Two catastrophic fires in two years (2019, 2021), recurring French regulatory notices, and FY2025 litigation expenses show operational risk is not fully contained. Any new incident would bring large costs and reputational damage.

3. Stagnant top line. Revenue has drifted from $6.7B (FY2022) to $6.2B (FY2025), a CAGR of about −2.5%. Advanced Materials growth has not yet been large enough to offset additives pricing normalization, and divestitures shrink the base further.

Catalysts and monitorables (next 12 months)

Analyst verdict

Lubrizol is a high-quality but structurally challenged franchise that has spent five years absorbing self-inflicted and external shocks. These include the Rouen and Rockton fires, a revolving door of CEOs, inflation, destocking and, most recently, a 2025 earnings reset tied to price normalization, restructuring and litigation. The disclosed data paint a business with flat-to-declining revenue ($6.5B in FY2021 to $6.2B in FY2025) but meaningful earnings torque. Pre-tax earnings ranged from an index of 100 to 194 over the period, which confirms that pricing power and raw-material spreads, not volume growth, set profitability.

Under Rebecca Liebert, now in her fourth year and since January 2026 also overseeing OxyChem, the strategy is coherent. It defends additives leadership through specification readiness and quality advocacy. It prunes non-core assets such as oilfield chemistry. It simplifies the organization through the Wickliffe consolidation. And it redeploys capital into higher-growth materials and geographies, especially Indian CPVC and medical devices. The H1 2026 rebound (revenue +7.0%, pre-tax +16.5%, Q2 revenue +11.1%) is the first evidence this playbook is working. It comes, however, against a weak 2025 base.

The central unresolved question is whether Advanced Materials and emerging markets can grow fast enough to offset the long, slow contraction of combustion-engine lubricant volumes, particularly in Europe, where Lubrizol could not even complete a downsizing. Process safety remains the single largest non-market risk; a third major incident would be strategically damaging.

For Berkshire, Lubrizol is a solid but not exceptional cash generator. Its returns on the 2011 purchase price depend on sustaining FY2024-type margins. Verdict: stable-to-improving near-term outlook (2026 recovery likely), with a cautious long-term view on growth. The key monitorables are Q3–Q4 2026 earnings momentum, the India ramp, and any new safety or legal events. Because all figures are parent-disclosed and incomplete, conclusions carry wider uncertainty than for a listed peer.