Gulf Oil Lubricants India Ltd. reported a 13.6 percent jump in profits for the year ended March 31, while China Rerun Chemical Group suffered a 50 percent drop in pre-tax profits for the half year ended Feb. 28
The companies described different conditions for Asias two biggest lube markets. Indias outlook is improving thanks to revived auto sales, and China is seeing intensifying competition.
In its first annual report since demerging from Gulf Oil, Gulf Oil Lubricants India Ltd. reported a profit after tax of Rs 77.4 crore (Rs 774 million, or U.S. $12.1 million) for the 12 months ended March 31, up from Rs 105.46 crore for the previous fiscal year. The company, which remains part of the Hinduja Group conglomerate, said revenues rose 12 percent to Rs 1,114 crore.
Gulf Oil Lubricants, which banks heavily on automotive segment, benefited from a 7 percent jump in sales of all types of vehicles during fiscal 2014-2015. This followed a two-year slump for Indias auto industry.
Gulf, which gets almost three quarters of its revenues from sales of automotive lubricants, continues launching products in the automotive segment, such as the introduction earlier this year of Gulf Pride Scooter 10W-30 engine oil to tap the potential of Indias fast-growing category of scooters.
China Rerun, which is based in Daqiing, Heilongjiang province, China, reported a pre-tax profit of 13.6 million (U.S. $2.2 million) for the six months ended Feb. 28, compared to 32.7 million for the same period a year ago. Sales revenue was 139.7 million, down from 164.7 million in the first half of last year. Cost of sales also fell, but by a lower percentage from 114 million in to 105 million.
Those results ended an extended string of continual growth by the company.
After a long period of sustained top- and bottom-line growth, it is disappointing to see a period when key financial metrics have worsened, Executive Chairman Xinghe Wu said.
Management said the decline in performance was mainly due to a downturn in sales volumes, which fell 13.6 percent to 7 million liters. This occurred despite the company spending more money to try to boost sales. Sales and distribution expenses rose to 14.1 million, from 11.2 million, mostly due to higher sales commission rates, distributor rebates and distribution costs.
We have experienced a more competitive environment than has been the case in the past, and some market share has been lost, Wu said, adding that the company will respond with investments in product development, human resources and equipment. We believe that this is a correct response to more challenging market conditions. This strategy has been successful for many years, and we believe it will be successful again.