Singaporean Suppliers’ Profits Sink


United Global Ltd. and AP Oil International Ltd. both saw their net profit decline by around 10 percent in 2016. The Singaporean lubricant blenders sales stumbled in at least some segments, but United said it was initial public offering expenses that kept it from a profit hike.

United Global – which began listing on the Singapore Stock Exchanges secondary board, Catalist, in the middle of last year – recorded U.S. $14.2 million in gross profit in 2016, an increase of around 2 percent. Its 9.5 percent drop in net profit was attributed mainly to initial public offering expenses. Barring the IPO, profit would have been marginally higher, the firm said.

United Globals revenue dropped 8.3 percent to $91.5 million, due to lower volumes and lower selling prices.

Gross profit from its trading segment – through which it distributes base oils, lubricants and additives – surged 34 percent to around $2.1 million, enabled by lower feedstock purchasing prices.

The trading segments revenue fell 17 percent to $40.8 million, partly because the company passed at least some of the base oil cost savings onto the prices of its finished products, but also because of lower sales volumes. Volume dropped by 5.7 percent and all products average selling price was 12 percent lower than in 2015.

We are gratified that we have managed to maintain our performance, despite 2016 being a challenging year due to the many uncertainties in the global business landscape, said Jacky Tan, executive director and CEO of United Global. The outlook remains challenging, however, we will focus on gaining market share and keeping an eye on our margins and sales volume.

Profits from the manufacturing of its own products declined by 2 percent, to $12 million. Sales in the manufacturing segment – which includes its own United Oil, U Star Lube and Bell1 brands – remained constant, at approximately U.S. $50.7 million.

Average selling price declined by 7.8 percent as a result of lower base oil prices, which affected revenue, but was offset by the 8.4 percent increase in sales volume due to the groups closer collaboration with its distributors to promote its products, enhanced brand awareness and market penetration, as well as provision of value-added services to its original equipment manufacturer customers, the company said in a recent press release.

Moving ahead, United Global will focus on achieving new levels of growth, particularly in its expansion into new markets despite the current market volatility and global economic uncertainties, the statement continued, adding reminders about plans it has established in the past few months to strengthen its presence in Indonesia, Taiwan and Myanmar through joint operations in each country.

Singapores AP Oil International Ltd. recorded an 11 percent drop in net profit, to $3.3 million Singapore dollars (U.S. $2.3 million). Revenue for the year dropped 8 percent to S$79 million due to lower franchising volumes and lower selling prices.

The prolonged depression in the oil sector, coupled with a weak global economy, has resulted in a challenging business environment for the second half of 2016 spilling into 2017, said a company statement. The global political environment adds further uncertainty over oil prices. Management is making every effort conscientiously to bolster the overall performance of the group in the challenging year ahead.

A subsidiary of the firm purchased two office units in Shanghai, China, raising property expenses by S$1.24 million.

Last year, the companys overseas revenue, mainly within Asia, accounted for about 45 percent of its total revenue. Vietnam, Bangladesh and the United Arab Emirates were its top three overseas markets. AP Oil has four laboratories in Singapore and one in Vietnam. The company produces AP Oil, SIN-O and Polaris branded-lubricants at two blending plants in Singapore and another in Vietnam.

Photo: United Global Ltd.

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