Profits for South Korean base oil refiner SK Lubricants skyrocketed more than 500% for the quarter ended June 30, and profits climbed for Indian lubricant makers Castrol India and Apar Industries, compared to the same period in 2020.
In addition to reflecting recovery from the COVID-19 pandemic’s economic impacts a year earlier, they also showed a return to profit levels near that of 2019’s second quarter.
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SK Lubricants reported that its operating profit grew 504% to ₩226 billion (U.S. $198 million) in the second quarter, improving from ₩37.4 billion in the same period last year. The profit was also well above its ₩78.2 billion profit mark in 2019’s second quarter
“Operating profit increased as higher selling prices due to continued tight supply sent margins soaring,” SK stated in its earnings presentation’s performance analysis.
Sales for the second quarter this year grew 61% to ₩762.8 billion.
The company said it anticipated that the base oil price spread will remain robust in the second half of this year, despite base oil supply expansion, due to growing restocking needs and base oil demand uptick. Base oil price spreads typically refer to the spreads between base oil and high-sulfur fuel oil prices. Fuels such as high-sulfur fuel oil and diesel are alternative products to base oils. Base oils are almost always higher priced, but they lack the economies of scale that fuels enjoy and incur some additional costs so that refiners may start to shift production away from base oils even when they are priced higher.
Castrol India Ltd.’s profit after tax of Rs 140 crore (Rs 1.4 billion or U.S. $18.9 million) was an improvement of 114% from Rs 65.4 crore in the same period last year, the lubricant maker stated in a regulatory filing. In 2019’s second quarter, the company reported net profit of Rs 180 crore.
Its revenue from operations grew 81% to Rs 889.6 crore, up from Rs 490.6 crore.
Castrol India’s second quarter 2020 results were affected by the onset of India’s countrywide lockdown due to the COVID-19 pandemic, which forced the company to close three manufacturing facilities on March 23 last year. Those manufacturing facilities – in Patalganga, Silvassa and Paharpur – began resuming operation in phases from the second week of May 2020 at its manufacturing facilities.
Indian transformer oil supplier Apar Industries reported Rs 48.7 crore in net profit for the three months ending June 30, rebounding from an Rs 20.7 crore net loss in the same period last year. It also was higher than a profit of Rs 42.1 crore in 2019’s second quarter. Standalone revenue from Apar’s transformer and specialty oil segment grew 125% to Rs 631.8 crore for the quarter, up from Rs 281 crore.