India’s Tide Water Oil Co. and Balmer Lawrie & Co.’s greases and lubricants segments both reported steep declines in profit, and Thai Oil Group’s base oil business reported a net loss for the quarter ending June 30. The companies all cited as a factor the economic impacts of the COVID-19 pandemic.
Tide Water Oil
Tide Water Oil reported standalone profit of Rs 14.8 crore (Rs 148 million or U.S. $2 million) for the quarter, down 32% from Rs 21.7crore a year earlier.
The manufacturer and distributor of Veedol-branded lubricants said revenue from operations fell 44% to Rs 164.8 crore for the quarter, down from Rs 295.7 crore a year earlier. Total expenses for the quarter were also down 44% at Rs 150.1 crore.
Tide Water Oil said in its filing that the impact of India’s government-imposed nationwide lockdown due to the COVID-19 pandemic was temporary, as the company obtained requisite approvals during the end of April through May to resume its manufacturing operations across its plants. As a result of the lockdown and restrictions, “production in the company’s plants could not be carried out [until] such approvals were obtained and consequently impacted sales and other operations,” the company stated. “The management estimates the demand for the company’s products to be lower in the short term but is not likely to have a continuing impact on the business of the company.”
The company noted the current economic environment could temporarily result in lower demand in fiscal year 2021 compared to fiscal year 2020. Tide Water said it has gradually ramped up its production from May and June and that it expects a steady increase in operation levels.
Grease supplier Balmer Lawrie & Co. reported that its greases and lubricants segment posted operating profit of Rs 0.6 crore (Rs 5.7 million or U.S. $77,000) for the quarter, down 94% from Rs 9.4 crore.
The Kolkata-based supplier of Balmerol-branded products said revenue for its greases and lubricants segment tumbled 36% to Rs 58.7 crore, down from Rs 91.9 crore.
“The company’s operations and financial results for the quarter have been very adversely impacted by the lockdowns imposed to contain the spread of COVID-19,” Balmerol noted in its financial statement. “The operations gradually resumed with requisite precautions during the quarter, with limited workforce and disrupted supply chain. The results for the quarter are therefore not comparable with those for the previous quarters.”
Stated-owned Thai Oil’s lube base oil business posted a 139 million Thai baht net loss (U.S. $4.4 million) for the second quarter, down from a 322 million baht net profit in the year-earlier period.
Lube base oil sales revenue dropped 41% to 2.9 billion baht, down from 4.8 billion baht in 2019’s second quarter.
The company’s plant in Si Racha, Thailand, posted a base oil production rate of 89% of name plate capacity during the second quarter, up from 85% a year earlier.
The base oil plant has 267,000 metric tons per year (5,100 barrels per day) of API Group I production capacity. The base oils are mainly used in industrial and marine lubricants and in engine oils for older engines.
According to Thai Oil’s earnings presentation, the price for its Group I base oil – based on ex-tank Singapore price – averaged U.S. $556 per metric ton for 500 solvent neutral in the second quarter. That was down 21% from a $700/t average in 2019’s second quarter.
Company management said in its discussion and analysis that the decrease was in line with lower prices for crude oil. “Moreover, global lube base oil demand continuously dropped, resulting from the weakened global economy due to city lockdown policies in order to prevent the spread of COVID-19,” the company stated.