Castrol India Posts Highest-ever Profit in Q2

Lubricant maker Castrol India Ltd. reported a 12 percent jump in its second quarter net profit, as volume growth in the personal mobility and industrial segments drove sales higher.

Mumbai-based Castrol posted a net profit of Rs 207 crore (Rs 2.07 billon, or approximately U.S. $31 million) during the April-June 2016 period, up from Rs 185 crore in the same period last year.

The company delivered its highest-ever quarterly profit, driven by volume growth and favorable cost of goods sold. Net sales increased 5 percent year over year to Rs 968 crore during the quarter.

For the first half of 2016, Castrol India posted a net profit of Rs 379 crore, up about 15 percent from a year ago. Net sales rose 6 percent year on year to Rs 1,820 crore during the period. The company recorded an overall volume growth of 7 percent in the first half of the year.

This volume increase is driven by double-digit growth in the personal mobility segment and power brands, Managing Director Omer Dormen said in a statement. We also see a positive trend in the industrial segment where we have grown ahead of the market in our focus categories of metalworking fluids and high-performance products.

During the first half of the year, the company said it added two new brands to the Castrol GTX family - Castrol GTX Ultraclean and Castrol GTX Eco. It also launched a high performance cutting fluid, Alusol SL 35 XBB, in the industrial segment.

We have seen volume growth across the segments, Dormen said on a recent conference call with analysts and investors. The industrial market has been quite sluggish, but despite that we have managed to increase our volume and thats mainly through our focused strategy on distribution as well as customer acquisition.

The company plans to launch a strategy to target industrial markets, he added. We are looking at some focused segment where we can add value and extract value in terms of our premium offerings.

Chief Financial Officer Rashmi Joshi said that there are some mixed signals in the economy but the company is well-positioned to take advantage of the momentum in the economy because of its strong brand, focus on personal mobility and wide distribution reach.

Dormen said that the lubricant market will continue to recover during the second half of the year, driven by increased vehicle sales and freight movement. However, the volatility of input costs and exchange rate will likely continue, he noted.

Castrol India is likely to continue the volume growth trajectory momentum seen in the first six months of the year,Dormen stated.