GTS Gained Big in 2014

GTS Chemical reported that revenue and gross profit for its lubricant division jumped 68 percent and 61 percent, respectively, in the second half of 2014, compared to the same period of the previous year.

The Chinese chemical and lubricant producer reported annual earnings last month for its full-year 2014, but the year-to-year comparison for the lube business was based on the second half of both years since production at its Liaocheng, China, blending plant commenced in July 2013.

Sales for the British Channel Islands-registered companys lube business were 139 million (U.S. $22.3 million) for the year-ended Dec. 31. In July through December of 2013, it sold 47,011 worth of lubes.

The increase in sales has been driven by investing in our marketing of the lubricant oils divisions products through an increase in the size of our marketing team, opening a sales office in Jinan, the capital of Shandong Province, and through direct advertising, noted CEO Cheng Liu. As a result we have enlarged our distributor network and increased national coverage, from 18 distributors across nine provinces at the beginning of the year to 48 covering 18 provinces by the end of 2014.

Lui pointed out that expenses increased at a slightly faster rate than revenue did, mainly due to labor cost increases, largely resulting from expanding its lubricant oils sales team. Given the continued growth, we are expecting to invest further in this division towards the end of 2015 in order to double our capacity, Liu said.

GTS blends and distributes more than 300 products under the Ogistar, Changyun and Qiaoke brands. In 2014, automotive lubricants made up 91 percent of its lube sales and industrial oils accounted for approximately 8.7 percent. Around 80 percent of automotive sales were to repair workshops, and the remainder were to petrol stations, sold through its distributors.

Liu said GTS retargeted its Qiaoke brand to the middle and low end of the market last year. Our Ogistar and Changyun brands continue to target the medium to high end of the market. Ogistar is our biggest seller by volume, and sales of the other two main brands are broadly equal.

GTS sold 3,972 tons of Ogistar-branded lubricants, 2,536 tons of Changyun and 2,555 of Qiaoke. Industrial sales and other products amounted to 676 tons.

Its lubricants segment - which it noted includes engine oil, gear oil, brake fluid, antifreezes and cutting fluids - made up approximately 20 percent of the groups total revenue. GTS primary segment, specialty chemicals, focuses on ammonium sulfite and ammonium bisulfite, of which it is Chinas largest and second-largest producer, respectively. It also has a recarburizer segment.