Profits Up for Calumet, Down for Quaker

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Profits Up for Calumet, Down for Quaker

For the quarter ending June 30, Calumet Specialty Products Partners LP reported a net profit, while Quaker Chemical, HollyFrontier’s lubricants and specialty products segment and Cosan’s lubricants business segment each posted a net loss. Clean Harbors’ Safety-Kleen segment and lubricants distributor Parkland Fuel each reported lower revenue.

Calumet

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Indianapolis-based Calumet reported a net profit of $3.6 million for the second quarter, improving on a $16.8 million net loss in the year-earlier period.

The company’s second-quarter sales dropped to $453.7 million, down 49% from $896.9 million.

“While the global pandemic has negatively impacted demand across a number of Calumet’s end markets, the diversity of both our business and our customer base allowed us to drive quality results this quarter and has proven the resilience of our businesses,” Calumet CEO Steve Mawer said in the company’s earnings news release.

“As expected, we observed a general softening of demand in April, with sales volumes initially declining before troughing in May as the global pandemic negatively impacted industrial and commodity markets,” Mawer said. “Since then, we have observed broader incremental improvement to demand, and as sales volumes have begun rebounding, margin performance has remained steady.”

Specialty product sales volumes for the quarter reached 18,642 barrels per day, down 21% from 2019’s second quarter. Lubricating oils accounted for 8,636 b/d, down 24%. Wax sales slid 10% to 1,290 b/d.

Packaged and synthetic specialty products – including production of finished lubricants and specialty chemicals products such as those from the company’s Royal Purple, Bel-Ray and Calumet Packaging facilities – fell 22% to 1,359 b/d.

Quaker Houghton

Quaker Chemical – also known as Quaker Houghton – reported a $7.7 million net loss, compared to a $15.6 million net income in the year-earlier period. The loss was primarily driven by the negative impact of COVID-19, the company noted.

“April and May were the worst months of the quarter as many customers globally were shut down or operating at reduced rates, especially in the automotive sector,” Chairman, CEO and President Michael F. Barry said in the company’s earnings news release. “In June, we began to see our net sales increase in all business segments.”

Net sales reached $286 million in the second quarter, up 39% from 2019’s second quarter. The increase was driven by additional sales due to the Conshohocken, Pennsylvania-based company’s August 2019 merger with Houghton International Inc. and its October acquisition of the operating divisions of Norman Hay.

Excluding Houghton and Norman Hay sales, current quarter net sales would have declined approximately 30% year-on-year, primarily driven by a decrease in sales volumes of approximately 27% and a negative impact from foreign currency translation of 4%, partially offset by an increase from price and product mix of 1%.  “The primary driver of the volume decline in the current quarter was the negative impact of COVID-19 on global production levels,” the company noted.

HollyFrontier

Dallas, Texas-based HollyFrontier Corp.’s lubricants and specialty products segment reported a loss of $209.3 million in income from operations in the second quarter, declining further from a loss of $147 million in 2019’s second quarter. Revenues from external customers declined to $353.6 million in the second quarter, down 35% from $545.3 million in the same quarter last year.

The lubricants and specialty products segment includes Petro-Canada Lubricants and its Mississauga, Ontario, refinery, which makes products such as base oils, white oils, specialty products and finished lubricants, along with specialty lubricants from HollyFrontier’s Tulsa refineries. Acquired companies Red Giant Oil Co. and Sonneborn are also part of the company’s lubricants and specialty products segment.

The company noted the COVID-19 pandemic caused a decline in U.S. and global economic activity starting in the first quarter of 2020. “This decrease reduced both volumes and unit margins across the company’s businesses, resulting in lower gross margins and earnings,” the company said in its earnings news release. “Over the course of the second quarter, demand for transportation fuels and lubricants stabilized and showed incremental improvement late in the quarter as compared to the end of the first quarter of 2020.”

Clean Harbors

Clean Harbors’ Safety-Kleen segment – which includes oil rerefining – reported third-party revenues of $245.6 million for the second quarter, down 28% from $342.1 million in the same period last year. Third-party revenues include sales of base oil, blended products, reclaimed fuel oil and a small amount of byproducts.

The pandemic adversely impacted Safety-Kleen because shelter-in-place restrictions imposed early in the quarter substantially lowered vehicle miles driven across much of the United States, Clean Harbors Chairman, President and CEO Alan McKim noted in the company’s earnings news release.

“This resulted in a reduction in near-term demand for core offerings in our Safety-Kleen branch network as well as for base oil and finished lubricants in our Safety-Kleen Oil business,” McKim said. “Aggressive cost actions enabled us to partly offset lower revenue in this segment. We also significantly raised our charge-for-oil rates for used motor oil as crude oil prices crashed, and demand for our re-refined lube oil products and other outlets for waste oil shuttered.”

He added that while Safety-Kleen began the third quarter on a positive trajectory, it remains below prior year levels. “The branch business continues to improve as summer-related driving increases demand for our services,” McKim said. “We are monitoring the impact of new shelter-in-place mandates, but the recent rise in COVID cases so far has not derailed our recovery in the Safety-Kleen branch business. For Safety-Kleen Oil, we have seen base oil and lubricant demand rebound, and we restarted production in July at two of the four re-refineries that we had temporarily closed.”

He noted the company will continue to actively manage its charge-for-oil rates to reflect the value of the waste oil and the collection services the company provides.

Parkland Fuel

Canada-based distributor Parkland Fuel Corp. posted 101 million Canadian dollars (U.S. $75.5 million) in consolidated revenue for its lubricants segment in the second quarter, a slight decrease from CA$102 million in 2019’s second quarter.

That included CA$77 million for its USA segment, up 20% from CA$64 million in 2019’s second quarter. The USA segment delivers ExxonMobil and Ridgeline lubricants, chemicals, ancillary automotive products, and equipment to commercial, industrial, marine and wholesale customers through an extensive delivery network in the regions in which Parkland operates.

The international segment posted CA$15 million in sales for the second quarter, down 40% from CA$25 million in the year-earlier period. The international segment consists primarily of the Sol business acquired in January 2019. Sol has operations in 23 countries, predominantly located in the Caribbean and northern coast of South America. It operates and services a network of retail service stations under brands including Esso, Shell and Sol.

Sales in the Canada segment were down 31% at CA$9 million. The segment now includes Canada Commercial and Canada Retail segments that were formerly presented as individual segments. Canada Commercial delivers lubricants, oilfield fluids and other petroleum products to commercial, industrial and residential customers across Canada.

Calgary, Alberta province-based Parkland sells branded and private label lubricants to commercial, industrial and wholesale customers.

Cosan

Moove, Cosan’s lubricant production and distribution arm, reported a 10 million Brazilian reais (U.S. $1.8 million) net loss for the second quarter, compared to R$51.9 million net income in 2019’s second quarter.

Net revenue for Moove fell to R$796.9 million in the second quarter, down 20% from R$1 billion.

Moove’s finished lubricant sales volume declined to 66,000 cubic meters (59,000 metric tons), down 35% from 101,800 cbm. The company attributed the decline to social distancing measures adopted across all countries in which Moove operates.

Sao Paulo, Brazil-based Cosan, a producer of sugar and ethanol products since 1936, expanded through acquisitions beginning in 2008 to become a distributor of fuels and lubricants.