2016: How is Lubrizol doing?
JONATHAN BRANDT: The Lubrizol lubricant additives business is one of your six largest non-insurance units, but there’s been relatively little disclosure about its performance since it was acquired nearly five years ago.
Can you please update us on how the core business has done and how the competitive landscape and end markets have evolved since it was acquired?
I know the core business is not a growth business, but has the increase in miles driven helped their top line at all?
Could you also talk about the performance of one or two of their more important bolt-on acquisitions, whether it be Chemtool, the pipeline flow-improver company, Warwick, Weatherford, or Lipotec?
WARREN BUFFETT: Yeah. The additive business — there’s four companies in it, basically — and it’s a no-growth, but very good, business, and we’re the leader.
So it has performed almost exactly as you would anticipate since purchase. And other specialty companies have — some of which have — have growth possibilities, but they’re small.
So Lubrizol overall, on an operational basis, has been very much as we anticipated, or you would’ve anticipated, if you looked at the prospectus at the time we bought it.
They made one large acquisition which is — was a big mistake, and that was in the oil field specialty chemical area, and was made just about the time that — or even a little after — that oil took a nosedive.
So we’ve had a — we’ve had some decent acquisitions there, but the biggest acquisition should not have been made.
It is — we still got the fundamental earning power of the additives business and everything. That has not disappointed us in any way. It’s a very well-run operation that way, but it’s not a growth operation.
Charlie?
CHARLIE MUNGER: Nothing to add.