BP’s Castrol segment reported a decrease in underlying replacement cost before interest and taxes for the second quarter ending June 30, yet remained hopeful for the business’ future. Nigeria’s Conoil saw a steep drop in gross profit for its lubricants segment but posted increases in sales revenue and cost of sales.
BP said that Castrol’s underlying replacement cost before interest and taxes dipped to $223 million for the second quarter, down 16% from $265 million in the same period last year.
The London-based company cited a few factors for the drop in its earnings release. “Base oil prices continued to increase, and COVID lockdowns in China, along with rising inflation, impacted results,” it said.
BP executives are still optimistic about Castrol’s prospects. “Castrol has tremendous upside,” BP Chief Financial Officer Murray Auchincloss said in an earnings conference call. “It has got huge headwinds right now on base oil price. Because of the price of oil, passing that on to customers has lagged. The additives shortage is starting to move behind us. We have the opportunity to high grade the warehouses around the world. And as markets rebound, especially in Asia, from COVID, we will get back to advertising and we should start getting more market share.”
Gross profit for Conoil’s lubricants segment took a sharp 68% decline to 369.9 million naira (U.S. $885,000) in the second quarter, compared with ₦1.1 billion in the second quarter of last year.
Sales revenue for the segment rose 40% to ₦2.8 billion, up from ₦2 billion the prior year.
The segment posted a huge increase in cost of sales, up 212% from ₦800 million to ₦2.5 billion.
Conoil’s lubricants segment product umbrella includes transportation and industrial lubricants, greases, process oils and bitumen. The company was founded in 1960 to market refined petroleum products and manufacture and market lubricants and household and industrial chemicals.