Chinese blender Qingdao Copton Technology Co. increased earnings by 31 percent on the year in its third quarter and sold one of its subsidiaries, a wholesale API Group I base oil broker, to focus on higher-quality base stocks.
Qingdao, Shandong province-based Copton earned 38.3 million (U.S. $5.5 million) in net profits in its third quarter, an increase of 31 percent over last years corresponding quarter, according to its recent earnings statement. It earned 99 million in net profits from January to September, up 26.5 percent over the first nine months of 2015.
However, non-operating income, or the chargeback imposed on distributors that did not reach the sales goals, surged to 1.9 million during the nine-month period, more than six times higher than that period in 2015.
On Oct. 25, Copton sold one of its subsidiaries – Qingdao Haichuan Chemical – to an individual. Copton said it sold Haichuan, a wholesale distributor it acquired in 2012, because it mainly procures low-quality base stocks, which no longer suit Coptons progression. Copton said it has been buying more Group II base stocks from large oil companies including ExxonMobil, China National Petroleum Corp. and Sinopec Ltd., to blend higher-quality lubes.
It also noted that Haichuans overall businesses, which includes precursor chemicals such as toluene, acetone, and acid-corrosion chemicals, are encountering less demand, resulting in losses in recent years.