BPs lubricants business reported lower profits due to the impact of increasing base oil prices, while transformer oil rerefiner Hydrodec reported lower revenues because of sales volume declines attributed to feedstock supply issues, each for the quarter ending March 31.
BPs lubricants business reported an underlying replacement cost profit before interest and tax of $331 million for the first quarter, down 15.8 percent from $393 million for the same period in 2017. Replacement cost profit reflects the replacement cost of supplies.
The result for the quarter reflects continued premium brand growth, more than offset by the adverse lag impact of increasing base oil prices, the London-based company stated in its stock exchange announcement Feb. 6.
BP noted that it is exploring new opportunities to work globally with the Renault-Nissan-Mitsubishi Alliance. This includes collaborating in a number of areas, including fuel and lubricants supply, and the joint development of advanced and new technologies, the company stated.
London-based Hydrodec expects its first quarter revenues to reach $3.5 million, down 22.2 percent from $4.5 million a year earlier. The company attributed the decline to lower sales volumes, offset in part by improved pricing.
Group sales volumes of the companys Superfine brand transformer oil and process oil declined 31.2 percent to 5.3 million liters for the quarter. Demand for end product remains strong yet feedstock supply, particularly challenging during the period, remains the key constraint to higher throughput, and strategic initiatives continue to secure sustainable, increased supplies going forward, the company said in its trading update May 2.
The company said the first quarter is historically difficult from a feedstock perspective, and that 2018s first quarter was particularly challenging.
In the U.S., significant weather disruption impacted supplies with our partner, G&S, not able to fulfill their budgeted volumes during the period, and other sources of supply being similarly impacted, Hydrodec stated. In Australia a large decommissioning contract scheduled for the first week of February was pushed back to the end of Q2, significantly impacting performance there. As a result, the board expects the groups earnings before interest, taxes, depreciation and amortization to be weaker than in recent quarters, with the group continuing to operate within current tight capital constraints. Hydrodecs partnership with transformer recovery firm G&S Technologies created Hydrodec of North America LLC as a new entity in April 2013.
Hydrodec reported further improvement in its sales mix between higher margin transformer oil and lower margin process oil, with transformer oil accounting for 66 percent of total sales in the first quarter, up from 53 percent in 2017s first quarter.
Hydrodec plans to issue its full year 2017 results at the end of May.