Profits Up for Valvoline

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Profits Up for Valvoline

Valvoline’s new business model – following the August announcement of the sale of its lubes unit to Saudi Aramco – kept positive momentum in sales and income, though they paled in comparison to Moove’s gains after its acquisition of a distributing giant. Meanwhile, Calumet Specialty Products Partners L.P. increased production and sales but experienced a heavy drop in profits.

Valvoline

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After announcing the sale of its Global Products business to Saudi Aramco for $2.7 billion in August – a deal expected to close late this year or in early 2023 – Valvoline shed reporting of those operations in its yearly and quarterly earnings releases. Global Products includes sales of its lubricant products. The sale came just three months after a restructuring of its business model.

The company made a dramatic business strategy shift to focus only on its Retail Services business, which encompasses its oil change stores in the United States and Canada.

The announcement of the sale classified the Global Products business as discontinued operations. All financial reporting going forward for now only includes the Retail Services sector.

Operating income for the company increased 8% to $95.5 million, from $88.3 million, accompanied by a 17% increase in sales to $410.8 million.

The quarter ending Sept. 30 is the fourth quarter of Valvoline’s fiscal year.

For its full fiscal year, operating income rose to $349.2 million, from $220.3 million, a healthy 59% increase, and sales climbed 20% to almost $1.5 billion.

“The sale of the Global Products business remains on track with the close expected in early calendar year 2023. As a pure-play automotive retail service provider, Valvoline’s strategy is to continue growing our preventive maintenance business through ongoing improvements in service performance and investments in network expansion, while continuing to develop capabilities for an evolving car parc,” said Sam Mitchell, Valvoline CEO.

“We’re entering fiscal 2023 with strong momentum,” he continued. “We expect to continue driving same-store sales growth by winning new customers and expanding average ticket. We expect to continue expanding our network of conveniently located stores, including a renewed focus on franchise development over time.”

Moove

Moove, the lubricants business of Sao Paulo-based Cosan, enjoyed big increases following its acquisition of PetroChoice, the largest lube distributor in the United States. The company’s profits, revenue and sales volume for its third quarter all outpaced results in the same period last year.

Revenue rose almost 65% in the third quarter, reaching 2.7 million Brazilian reals (U.S. $499 million).

The increase helped it bring in 235.9 billion reals, up 185% from 2021’s 82.7 billion reals. Volume sold increased to 158.2 billion reals, a 66% bump from 95.2 billion reals.

“Moove remained focused on consolidating PetroChoice, which will further strengthen our position as a relevant global player and our growth strategy supported by a robust portfolio and unique positioning in the Americas and Europe,” Cosan CEO Luis Henrique Guimarães said in its earnings news release.

Moove acquired PetroChoice, the largest lube distributor in the U.S., for almost half a billion dollars in May as part of a plan to expand the company as a global lubricants player. PetroChoice distributes approximately 62 million gallons of lube annually, carrying major brands like Mobil and Shell.

Even before the acquisition, the Brazilian company has been posting record profits and revenues with distribution in Europe and a smaller U.S. distributor.

Calumet

While Calumet saw an increase in sales – plus improved specialty products production – it suffered a decrease in net income for the third quarter, countering its dramatic pandemic recovery by that benchmark.

Sales jumped 33% for the June-to-September period, to $1.2 billion, from just under $875 million.

Specialty products production included an 8% increase in lubricating oils to 11,681 barrels per day, a 1% decrease of solvents production at 7,134 b/d and a 5% increase in wax production to 1,611 b/d. The total production of those three categories combined came out to 20,426 b/d, up just 5% from the 19,509 b/d mark in 2021.

A separate performance brands category that includes packaged and synthetic specialty products rose almost 6%, to 1,299 b/d.

“Third quarter results improved from the same quarter last year as price increases announced earlier in prior periods have taken hold and raw material costs have started to stabilize,” said CEO Todd Borgmann.

Despite the increases in sales and most of its production, Indianapolis-based Calumet’s income declined almost 72% – to just $14.6 million in the third quarter, down from $51.5 million.

After speculation it would sell its lubricants segment in February 2021, Calumet committed to keeping what it called a “high-growth” business and even planned further future investment in the area.