Singaporean lubricant supplier United Oil Co. will not set up a blending plant in Myanmar as the company discussed last year. Instead, it will supply its products there through a recently signed joint operation agreement with local agent Lighthouse Enterprise Ltd.
We decided to put on hold our earlier plans to set up a blending plant in Myanmar due to the countrys lack of reliable supporting industries, such as packaging materials,CEO Jacky Tan told Lube Report Asia. We will support the joint operation with our products blended and packaged from Singapore in the meantime.
United hopes Lighthouses firsthand experience in the market will help it boost its footprint in the country. United Oil and Lighthouse will invest initial capital of U.S. $90,000 each for the three-year, extendable joint operation agreement.
In August 2016, United Oil signed a non-binding memorandum of understanding with Lighthouse to explore collaboration opportunities. One possibility involved Lighthouse setting up a lubricant manufacturing plant in Myanmar and paying royalties to United Oil for its blending expertise. The six-month MOU ended in January this year.
Lighthouse processes rubber, trades beans and pulses and imports and distributes tires and lubricants in Myanmar. The Yangon-based firm has been one of Uniteds primary customers since 1999.
In December, United Oil set up a 35-65 joint venture with Taiwans Jin Wei Chuang Co., with paid-up capital of New Taiwan dollar 7,000,000 (U.S. $200,000)
Uniteds parent firm, United Global Ltd., trades base oils, additives and lubricants in more than 30 countries and was listed last year on Catalist, a secondary board of the Singapore Exchange. In 2015, more than 88 percent of its sales were made outside Singapore. The company has a 44,000 metric tons per year blending plant in Tuas, western Singapore. It manufactures automotive lubricants, specialty fluids, industrial lubricants and toll-blends for other marketers.
Revenue during the companys financial half year, ended June 30, 2016, dropped 20 percent to US $42.3 million due to lower average selling prices and a marginal decrease in sales volume. However, its gross profit margin increased by 14.5 percent on improvements in both manufacturing and trading segments.