Singapore Blenders Report Mixed 2018 Results

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United Global Ltd. reported double-digit percentage growth in net profit last year due to an increase in demand in the automotive sector, while fellow Singaporean lubricant blender AP Oil International Ltd. continued its decline in net profit for 2018 following a drop in 2017, mainly due to the loss of a major marine lubricant customer.

United Global

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United Globals net profit for 2018 increased 17 percent to U.S. $7.7 million and revenue improved by 9 percent to $108.5 million.

The companys manufacturing segment revenue jumped 32 percent to $105 million, due to higher sales volume in Singapore and Indonesia. Although lubricants had marginally lower average selling prices, heightened competitive pricing and a difference in product mix helped boost sales, the company said in its financial results announcement last week.

Revenues from base oil and additives trading declined 83 percent to $3.4 million due to the elimination of cross selling of base oil and additives from the groups Singapore plant to [PT Pacific Lubritama Indonesia] following the acquisition [in July 2017], United Global said in the announcement. PLI is an Indonesian lubricant manufacturer with a production capacity of 80,000 metric tons per year.

Moving ahead, United Global has a three-pronged growth strategy. While we continue to focus on expanding our existing lubricants business organically in the region, we will also explore synergistic partnerships and joint ventures to strengthen our presence in selected overseas markets, United Global CEO and Executive Director Jacky Tan said.

In October last year, the company signed a memorandum of understanding with Spanish oil major Repsol to explore the possibility of Repsol acquiring an equity stake in a subsidiary of United Global.

Repsol is presently working on the feasibility study on the groups lubricants businesses, United Global said in the announcement.

United Global is an independent lubricant manufacturer and markets its own brand of lubricants, such as United Oil, U Star Lube, Bell1, Hydropure and Ichiro. The company has a blending capacity of 60,000 metric tons per year in Singapore.

AP Oil

Singaporean independent lubricant blender, AP Oils net profit fell 16 percent to S$2 million (U.S. $1.5 million) while revenue fell 15 percent to S$78.4 million due to lower manufacturing volume and franchising activities.

Despite the slowdown, the company is investing S$10.6 million to expand its warehouse and blending plant, upgrade its tank farm and others, which is expected to be completed by the second half of this year.

In 2017, the groups largest marine lubricant customer [Aegean Marine Petroleum Network Inc., listed on the New York Stock Exchange], embarked on a strategy to gain market share. However, in financial year 2018, the customer filed for [the U.S. bankruptcy code] Chapter 11 process. This resulted in a significant loss in volume, the company said.

Though the group has found new customers in marine lubricants, these relationships are still in their infancy. The competition in marine lubricants remains strong, it added.

AP Oil International markets automotive, industrial and marine lubricants under the AP Oil, SIN-O and Polaris brands. It has two blending plants in Singapore and a facility in Vietnam, operated by its joint venture, AP Saigon Petro. The blending plant in Vietnam has production capacity of 25,000 tons per year and 4,000 tons of tank storage for base oil, additives and finished products.

AP Oil also partnered with Chinese motorcycle engine manufacturer Zongshen Power to market automotive lubricants in Western China. Its franchising scheme involves the transfer of lubricant technology and plant design and has been implemented in Vietnam, Nepal, China and Bangladesh.

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Business    Earnings    Finished Lubricants    Region    Singapore    Southeast Asia