Calumet Specialty Product Partners L.P. plans to retain its finished lubricants and chemicals business and moreover to focus future investment on those segments, the company said yesterday in an update on its progress and strategy. The statements were intended to quash press reports from last fall suggesting the company was seeking a buyer for its lubricants business, which officials described as high growth.
Bloomberg was the first to report that the company was seeking a buyer for its lubricants business, in an Oct. 1 article.
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“This business has been the subject of market speculation,” Calumet said in a news release yesterday. “However, we intend to keep this high-growth business, which has an expected annual adjusted [earnings before interest, taxes, depreciation, and amortization] exceeding $60 million, based on our 2021 market outlook.”
The company said the finished lubricant and chemicals business’s growth rates and “iconic” brands are supported through innovation and investments, such as last year’s roll-out of a consumer five-quart bottle for its Royal Purple unit, or the upgrading and expanding of Royal Purple’s BioMax line of environmentally acceptable lubricants. Calumet said it would provide more detail on the business’ growth potential in support of its objective to create investor transparency.
The COVID-19 pandemic created new problems for Calumet’s lubricants business last year, as it did for companies throughout the industry. During the first six months of 2020, the company’s production volume of packaged and synthetic specialty products fell 24% year to year to 1,382 barrels per day. That represents production of finished lubricants and chemicals specialty products including products from its Royal Purple, Bel-Ray and Calumet Packaging facilities.
In April the company announced it would close a lubricants plant in New Jersey and furlough manufacturing employees at a Missouri synthetic lubricants plant as part of its efforts to shore up its balance sheet. Those and other expected measures were expected to save $20 million to $30 million.
Calumet yesterday also said it plans to re-segment its financial reporting starting with 2021’s first quarter. “Management believes that this will allow each business strategy and performance to be presented transparently to investors,” the company stated.
The former finished lubes and chemicals segment will be known as performance brands.
The other segments are called Montana renewables; specialty products; and corporate. Montana renewables include Calumet’s Great Falls refinery and its dual-train energy transition business. The specialty products and solutions segment includes solutions and formulations covering multiple specialty product lines. The corporate segment will offer direct insight into corporate costs required to run the company’s three distinct operating divisions.