Raw Material Costs Hinder AP Oil’s Profits

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Raw Material Costs Hinder AP Oil’s Profits

Singaporean independent lubricants blender AP Oil reported that its net profit dropped 39% to Singaporean $1 million (U.S. $714,000) for the six months ending June 30, citing the impacts of inflation and rising raw material prices.

“Amidst broad-based global inflation, raw material prices across all categories have risen and eroded profit margins,” AP Oil commented in its earnings press release. “In view of the current macroeconomic climate, we expect these conditions to persist.”

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Revenue for the first six months of this year rose 13% to S31.1 million, improving from S$27.7 million.

For the period, revenue rose mainly due to an increase in manufacturing activities, offset by lower trading income, the company said in its financial statement’s performance review.

Gross profit fell 17% to S$4.7 million for the first six months, compared to S$5.6 million. AP Oil said the decline in the year’s first half was due to a gross margin decrease, which stemmed mainly from low margin of trading income due to opportunistic higher selling price during the period.

The blender, which has a blending plant in Singapore, markets automotive, industrial and marine lubricants under the AP Oil, SIN-O and Polaris brands. The company’s joint venture, AP Saigon Petro, operates a facility in Vietnam.

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