Lubes Help Drive Idemitsus Growth


Idemitsu Kosan of Japan projects that 85 percent of new income in its functional products division – which includes chemicals and agri-bio products – will come from increased lubricants sales.

Earlier this month, Japan-based petroleum company Idemitsu Kosan announced its medium-term management plan for the next three years (fiscal years 2013-2015). Idemitsu has been successful over the past three years with returns on investment nearing 10 percent and revenue steadily increasing from $32 billion in 2009 to a forecasted $45 billion for 2012. Much of this success, which has helped the company leap onto the Forbes 200 list of wealthiest companies in the world, has been a result of Idemitsus aggressive investment approach overseas – particularly in Southeast Asia.

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With regard to its lubricants business, Idemitsu intends to increase its footprint in Asia. The lubricantsbusiness is currently housed under Idemitsus functional materials directorate – one of Idemitsus three main divisions – which also controls the companys chemicals and agri-bio products. This directorate generated approximately 10 percent of Idemitsus operating income in 2009. Under the new strategic plan, however, the directorate is forecasted to generate 25 percent of Idemitsus overall operating income by fiscal year 2015.

One area that Idemitsu will continue to focus on is Vietnam. The company already has labeled Vietnam as a core business interest in its 2011 financial consolidated report, mainly as a result of its significant investment into the Vietnam Nghi Sonh project, which fulfills its strategy aimed at business expansion through entry into growing overseas markets. The Nghi Sonh oil refinery, about 200 kilometers south of Hanoi, is slated to be operational by 2014 and have a capacity of 200,000 barrels per day. Idemitsu holds a 35 percent stake as part of an international consortium tasked with developing the project.

On the lubricants side, Idemitsu announced last August that it would invest nearly $25 million into a lube blending facility in Haiphong. The plant is slated to be operational in 2014 and will have the capacity to manufacture 35 million liters of lubricants peryear. The Haiphong facility will focus on production of engine oils for motorcycles, automobiles, general industrial lubricants and other related products. Idemitsu also has lubricants plants in Thailand, Malaysia, Taiwan and China. When contacted byLube Report, company spokesman Miki Shimizu indicated that increasing overseas lubricants remains a priority for Idemitsu, especially in Southeast Asia.

The companys lubricant business is still recovering after a tumultuous fiscal shock in 2011 as a result of the 3/11 tsunami and earthquake in Japan and the extensive flooding in Thailand later that year. Despite this, Idemitsu was able to reduce the downward pressure on its lubricant-based profits largely as a result of the strength of its investments in South East Asia, mainly through the expanded profits at its Idemitsu Lube Techno Indonesia subsidiary.

Related Topics

Asia    Finished Lubricants    Region