Profits Drop at AP, United Global

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Two Singapore-based lubricant producers – AP Oil International and United Global Ltd. – reported recently that their earnings declined in 2020. AP Oil blamed a drop in sales and profit margins during the year of the coronavirus pandemic, while United cited the transition of its finished lubes business to a joint venture.

AP Oil also said that the outlook for this year is still uncertain because of the ongoing impacts of COVID-19.

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AP Oil posted a gross profit of S$8.7 million (U.S. $6.5 million) for last year, down 16% from 2019. Sales revenues fell 9% to S$57.1 million, while the cost of sales shrunk 8% to S$48.5 million. As a result, the company’s profit margin dipped from 16% to 15%.

The company, which manufactures and markets finished lubricants while also supplying specialty chemicals, navigated the year without taking on large amounts of new debt. The amount of borrowings and debt securities payable within one year decreased from S$1 million to S$879,000, while longer term debt rose from S$5.1 million to S$5.3 million.

The company’s year-end financial statement, posted March 1, reminded that COVID-19 is still impacting the industry.

“The Covid-19 pandemic fallout on the global economy is likely to continue in 2021, creating uncertainties and challenges to our business,” the statement said. “The recent sharp rise in commodity prices and cargo freight rates, as well as the global shortage in the raw materials used in our business, have led to cost increases.”

United said in its Feb. 25 posting that the company earned a gross loss of U.S. $264,000 in 2020, compared to a profit of U.S. $19.7 million the previous year. The greatest reason for the decline, it said, was the 2019 sale of 40% of its finished lubricants manufacturing and marketing business to Spain-based Repsol.

In addition to the joint venture, which operates as United Oil, United Global has wholly-owned operations that trade base oils and supply lubricant additives. It also has four other business pillars: United Supply Chain, which is involved in logistics and shipping; United Innovations, which manufactures nano-fiber oil absorbent materials; United Fuels, which trades of petrol-related products; and United Renewables, which looks for opportunities in materials recycling and sustainability.

The joint venture’s profit rose 11% in 2020 to U.S. $11 million. The JV’s profit margins increased 5 percentage points to more than offset an 18% fall in sales revenues, which slid to U.S. $89.7 million.

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