Nynas naphthenic business unit, which primarily supplies base oils, reported earnings before interest, taxes, depreciation and amortization of 129 million Swedish krona (U.S. $14.9 million) for its first quarter, down 37.4 percent from 206 million krona a year earlier.
In its first quarter interim report, the company attributed the decline mainly to a faster increase in the cost of goods sold, compared to price increases for finished products.
The Swedish company reported a slight increase in net sales for its naphthenic unit to 1.93 million krona, up from 1.85 million krona in 2017s first quarter. That is mainly driven by increasing crude oil prices feeding into higher sales prices, according to Nynas.
Sales volumes in Europe, Middle East, India and Africa were in line with expectations and similar to the same period in 2017. Sales volumes in India continued to rise and set a new record for a quarter, the company said in its interim report.
Volumes in the Americas were below the same period in 2017, mainly due to continued supply constraints. Nynas said Asia Pacific sales volumes in the first quarter were up 7 percent from the same period a year earlier.
Nynas President and Chief Executive Officer Gert Wendroth said in its interim report that demand for naphthenic specialty oils was stable during the first quarter of 2018. Oil prices continued their way upward due to uncertainty in the Middle East, and the impact from OPEC production cuts, putting some pressure on margins, as increases in feedstock prices can only be passed on with some time delay, Wendroth stated.
Nynas is co-owned by Neste Oil and Petroleos de Venezuela S.A. (PdVSA), which has a long-term marketing agreement to sell naphthenic base oils produced by the Refineria Isla refinery operated by PdVSA in Emmastad, Curacao. That plant has 3,700 b/d of naphthenic capacity and 5,000 b/d of paraffinic Group I capacity.