Hong Kong-based Yip’s Chemical Holdings Ltd.’s lubricants business reported higher operating profit and sales for the full year 2020, boosted by diversifying its product offerings and lowering operation costs through automation.
The lubricant business posted operating profit of $7.6 million Hong Kong dollars (U.S. $979,000) in 2020, an 18% improvement from 2019.
Sales for the lubricant business grew 8% to HK$220 million.
The lubricants business expanded the market for its automotive lubricants steadily, the company said in its earnings news release. “This was achieved on the one hand by rolling out mid- to high-end products through current distribution channels,” Yip’s Chemical stated. “On the other hand, the group enhanced automation to raise production efficiency while lowering operation costs.”
The company noted that although the price of base oil kept rising during the year, by improving operating efficiency, the business’ gross profit margin only dipped by 2 percentage points. “In the last two years, the lubricants business has managed to turn around the loss-making position while building a more robust development platform,” the company said. “The group will continue to concentrate on expanding the sales network for automotive lubricants and will also introduce various new products to secure a larger market share.”
In its half-year interim earnings news release issued in August 2020, Yip’s Chemical said the lubricants business posted an HK$9.3 million operating loss through the first six months of the year, with sales down 25% at HK$81.4 million. At the time, the company noted that COVID-19’s impacts had diminished car owners’ demand for car maintenance, hampering auto repair shop business and reducing automotive lubricant demand. It had expressed optimism that China’s economic recovery would come in 2020’s second half, gradually driving up automotive lubricants demand. The company said its management would focus on opening up more distributor channels to accelerate expansion of its sales network.
According to its website, Yip’s Chemical has produced lubricants since 1992 and now supplies a complete range of automotive, industrial and specialty lubricants under the Hercules and Pacoil brand names. Yip’s Chemical Holdings Ltd. was established in 1971 and listed on the Hong Kong Stock Exchange in 1991. The group focuses on the production and sales of petrochemical products, including solvents, coatings, inks and lubricants, with its nationwide sales network covering all major provinces and cities across China. The group said it has strived to provide value-added services to consumers in recent years, such as investing in automobile lubricant changing and maintenance chain businesses.