Profits Up for Moresco, China Rerun


Moresco Corp. and China Rerun Chemical Group reported gains in profits – Moresco for its third quarter, Rerun for its 2014 fiscal year. Castrol India saw its profits dip in 2014, despite an increase in sales revenue.

Specialty lube manufacturer Moresco reported net profits of 1.2 billion (U.S. $10 million) for the three months ended Dec. 31. That represented a 37 percent improvement from the third quarter of fiscal 2013. Sales revenue rose 14 percent to 20 billion.

This was due to a shift to new high performance products [for hard disk surface lubricants], the company said in its financial statement.

Moresco, which is based in Kobe city, Japan, makes automotive and industrial lubricants, striving to focus on niche products, along with materials such as functional fluids, hot melts and liquid paraffins.

Specialty lubricants like metal cutting fluids and die casting mold releasing lubricants increased by 16 percent in the third quarter, compared to the same period of fiscal 2013. Synthetic lubricants increased 13 percent, with hard disk surface lubricants, showing the biggest growth of 24 percent.

Overseas sales revenues – dominated by China, Indonesia, Thailand and North America – jumped by 35 percent to 7 billion. Overseas sales take up 35 percent share of the companys total sales.

In the case of overseas subsidiaries, we expect an increase in profits in the synthetic lubricant segment, and with the effects of a weaker yen, we adjusted our forecast for our financial year 2014, Moresco said in its statement.

The company expects markets to continue to expand with total sales reaching 38 billion and net profits 2.3 billion for financial year 2017.

Moresco is positive on the automotive sector which takes up 43 percent share of total sales. We forecast an increase in automotive production in China and the emerging markets in Southeast Asia, said the company.

[In addition], there is a steady demand from the server market and with the development of large memory technology for hard disk drives, we aim to develop new lubricants for reliability and ultra-thin [nano level] surface lubricants to increase sales, it added.

According to the company website, Moresco has about 50 percent share of the domestic Japanese market for die casting liquids and about 70 percent share of fire resistant hydraulic fluids. The company said its base oil for heat-resistant grease used around engines is used in almost all Japanese cars produced throughout the world.

China Rerun, which is based in Daqing, China, reported last week that it earned a net profit before taxes of CNY 48.9 million (U.S. $7.8 million) for the year ended Aug. 31. That represented an 8.6 percent increase over the previous 12 months. Sales revenues jumped 17 percent to CNY 319.3 million.

Chief executive officer, Wu Xinghe, said the company is benefitting both from continued growth of the Chinese engine oil market and from its strategy of focusing on higher quality products. In addition to sustained demand for lubricant oils in the domestic market, we have benefitted from our focus on high quality branded products, maintaining our high quality distribution network and broadening our geographic representation in China, he said.

The average selling price of China Reruns lubricants rose to CNY 20 per liter. Gross margins were 27.2 percent in fiscal 2014, up from 26.6 the previous year. Sales volumes grew 9.4 percent to 15.9 million liters.

Castrol India posted a net profit after taxes of Rs 474.5 crore (Rs 47.5 billion, or U.S. $77 million) for its 2014 fiscal year, which ended Dec. 31. That was 6.7 percent less than in 2013. Sales revenue rose 6.6 percent to 3,907 crore, but costs were up almost across the board, including items such changes in inventories, costs of materials, employee benefits and advertisements and promotions.

Managing Director Ravi Kirpalani called it a strong year, saying the company made progress in areas such as driving safety, employee engagement, brand health and market share of key products in important geographic areas.

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