SK Income Up, Valvolines Down


Ashlands Valvoline division reported higher sales but a drop in operating income for the quarter ending June 30, while SK Lubricants posted increases in operating income and sales, compared to year-earlier results.

According to parent company Ashland, Valvoline posted operating income of $73 million for the three months ending June 30 (the third quarter of Ashlands fiscal year), down 30.1 percent from $95 million for the same period in 2009. Valvolines sales for the quarter reached $463 million, up 5 percent from $441 million a year earlier.

Rising raw material costs led to gross profit, as a percent of sales, of 32.4 percent in the quarter, a 510-basis-point decline versus the record year-ago quarter, when raw material costs were falling, the company explained. Same-store sales at Valvoline Instant Oil Change increased by 10 percent over the prior June quarter, and international operations also contributed to sales and volume growth.

As a whole, Covington, Ky.-based Ashland reported $163 million on operating revenues of $2.4 billion in the quarter.

SK Lubricants posted operating profit of 59.8 billion South Korean won (U.S. $49.9 million) in the quarter ending June 30, compared to a 73.5 billion won loss in 2009s second quarter. The company attributed the improved operating profit to a rise in base oil prices and increased sales volumes. Seoul, South Korea-based SK Lubricants posted 476.3 billion won in sales for the second quarter, up 48.2 percent from 246.7 billion won in the year-earlier quarter.

SK Energys lubricants division was spun off into a new, wholly-owned subsidiary in October 2009.

SK operates a 21,000 barrel per day base oil refinery in Ulsan, South Korea, where API Group II and III production targets high quality passenger car motor oils. The SK-Pertamina joint venture plant in Dumai, Indonesia, which is 65 percent owned by SK, has about 7,000 b/d of Group III capacity.

SK Energys July 23 financial results presentation noted that SK Lubricants signed a contract in June to partner with Repsol YPF on building a new 13,000 barrels-per-day API Group III base oil plant in Spain. Commercial production is scheduled to start in the first quarter of 2014, according to the presentation.

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