SK, S-Oil Post High Profit Gains

Share

SK Lubricants and S-Oil posted high earnings in their base oil and lubricants businesses for the first three months of the year thanks to low crude oil prices, while PT Pertamina Lubricants recorded a net profit of U.S. $143 million in 2015.

SK Innovation, South Koreastopoilrefiner and owner of SK Lubricants, said its base oils and lubricants business earned132.2 billion won(U.S. $115 million)of operating profitin the first quarter, a 133 percent hike from 56.7 billion won during the first quarter of 2015. The company also said in an earnings report last week that its sales were 622.3 billion won, a 0.3 percent growth from 620.1 billion won in the same period in 2015.

Get alerts when new Sustainability Blog articles are available.

Loading

SK’s chief financial officer, Jinsok Cha, said this is SK Lubricants highest operating profit since the third quarter of 2011. This is mostly due to an improved base oil spread from lower feed stock prices and [selling, general and administrative expenses], he added. The base oil spread gradually improved on the back of reduced feedstock cost while sales price remained relatively stable.”

Regarding the second quarter, Cha predicted base oil spreads may shrink a bit. “We anticipate that the margin will be contracted quarter on quarter, he said. But we believe that increase in demand will offset it, and actual decline will be somewhat limited.”

S-Oil also reported its lube business recorded 127.5 billion won (U.S. $111 million)of operating income in the first quarter, up 75 percent from 73 billion won during the same period in 2015. But its revenue was down 14 percent to 325.4 billion won, from 378.1 billion won in the first quarter of 2015.

The lube base oil business was a surprise,” saidS-Oil chief financial officer Juwan Bhang. The good performance was mainly driven by a large increase in production and sales of [API] Group III products with the companys plant in Onsan, South Korea, running at full capacity after maintenance works in the previous quarter.

On the market outlook, Bhang added: “The lube base oil market will likely continue to see a healthy spread, supported by stable demand for high quality products in the U.S. and Europe,despite new capacity addition from the Middle East in the second quarter.”

PT Pertamina Lubricants, a subsidiary of Indonesias state-owned oil company Pertamina, posted a net profit of approximately 1.89 trillion Indonesian rupiah (U.S. $143 million) in 2015.

For shareholders, this means that the lubricant manufacturer can continue to grow and can achieve performance…without having to obtain additional capital reserves for operating results in 2015, Gigih Wahyu Hari Irianto, president director of PT Pertamina Lubricants, said during a general meeting of shareholders last week.

Founded in September 2013, PT Pertamina Lubricants manufactures and supplies a wide range of lubricants for passenger cars, heavy-duty trucks, motorcycles, and small engines, along with industrial and marine applications.

Related Topics

Business    Earnings