Renewed demand for vehicles and greener products will support revenue growth
Los Angeles, CA (PRWEB) November 22, 2012
The Lubricant Oil Manufacturing industry produces industrial and automotive lubricants for manufacturers and consumers, including motor oil, transmission fluid, rust inhibitors and machine oils. According to IBISWorld industry analyst Sean Windle, “The industry experienced its share of wear and tear over the past five years, with the economic recession, which led to a downturn in consumer income and downstream manufacturing activity.” These factors compelled consumers to drive less and hold off on car expenses, while manufacturers were forced to leave factories idle or exit their industries. As a result, fewer lubricant products were purchased during the recession and industry revenue dropped 10.8% in 2009. However, strong demand following the recession resulted in overall positive growth from 2007 to 2012, with revenue expected to increase at an average annual rate of 0.8% to $16.3 billion. Much of that growth took place over the past two years, with revenue climbing 10.1% and 6.5% in 2010 and 2011, respectively. In 2012, revenue is expected to climb an additional 2.7%.
Despite overall revenue growth, average industry profit margins are projected to fall from 5.6% of revenue in 2007 to 5.2% in 2012, thanks to a steep drop in demand from downstream manufacturing markets, coupled with rising input costs. “In addition, strong refining capacity expansions prior to the recession resulted in production outweighing demand when the economy tanked,” says Windle. The downturn in demand and profitability forced some players out of business, with the number of enterprises operating in the industry falling at an annualized rate of 0.1% to 358 companies.
The Lubricant Oil Manufacturing industry consists of a relatively modest number of firms, with major oil companies representing the largest players. IBISWorld estimates the top four industry players (ExxonMobil Corporation, Royal Dutch Shell, Ashland Inc. and WD-40 Company) account for under half of industry revenue in 2012, pointing to a medium level of industry concentration. In addition, these firms play a further role within the industry, supplying lubricating oil base-stock to other specialist lubricant producers. Industry concentration has increased over the past five years with Shell's $4.5 billion purchase of East Resources Management, LLC in 2010. The acquisition consisted of oil and gas properties located in the Marcellus Shale in the Northeast United States.
The long-term outlook is bright for the industry. Overall, the industry is projected to continue expanding, with an expected revenue gain heading into 2013, as improving economic conditions bolster demand from downstream manufacturers. Revenue will also benefit from rising oil demand from consumers, as the number of cars on the road and the number of miles driven increase. In the five years to 2017, revenue is anticipated to increase.
For more information, visit IBISWorld’s Lubricant Oil Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry manufacture petroleum products (except for asphalt paving, roofing and saturated materials), such as blended motor oils, brake fluids, lubricating grease and other oil-based additives. Key buyers include downstream automobile manufacturers, wholesalers and automotive retail chains.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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