Q3 Earnings Wrap-up


Profits were up for Afton Chemical, SK Lubricants and BPs lubricants business, while sales were down for Heritage-Crystal Cleans oil business segment, all in the third quarter, compared to the year-earlier period.

Afton Chemical

Afton Chemical, NewMarket Corp.s petroleum additives segment, reported an operating profit of $100.5 million for the three months quarter ending Sept. 30, up 6.6 percent from $94.3 million in the year-earlier quarter. The increase was mainly due to lower raw material costs partially offset by an increase in research and development investments and changes in foreign currency exchange, NewMarket said in its earnings news release.

Additives segment revenue reached $536.2 million, down 8.4 percent. This was due mainly to foreign currency exchange and changes in selling prices and mix, the company noted. Shipments were essentially flat between the periods, with increases in fuel additives shipments globally offset by declines in lubricant additives, primarily in the North American region, NewMarket stated.

As a whole, Richmond, Va.-based NewMarket posted net income of $62 million, or $5.08 per diluted share, in the third quarter. That was an increase of 9 percent from net income of $56.9 million, or $4.53 per diluted share a year earlier.

SK Lubricants

SK Lubricants reported operating profit of 83 billion South Korean won (U.S. $73.5 million), up 13.4 percent from 73.2 billion won a year earlier.

Third quarter sales declined to 665.2 billion won from 700.9 billion won, a 5.1 percent decrease.

In its earnings news release, the company said operating profit jumped due to higher base oil margins driven by weak oil prices. The base oil margin is expected to remain solid as the demand for premium base oil gradually rises, the company said.

SK operates a 40,000 barrels per day API Group II/III base oil plant at its refinery complex in Ulsan, South Korea, which includes a 26,000 b/d joint venture base oil plant built by SK Innovation with JX Nippon Oil & Energy.

Seoul-based SK Lubricants also has a joint venture plant with Pertamina in Dumai, Indonesia, with 10,000 b/d of Group III capacity and partnered with Repsol on a 12,900 b/d Group II/III plant that opened in Cartagena, Spain.

Heritage-Crystal Clean

Heritage-Crystal Cleans oil business segment, which includes used oil collection and rerefining activities, reported $30.6 million in sales for the quarter ending Sept. 12, down 15.2 percent from $36.1 million in the year-earlier period.

The company cited lower selling prices for its oil-based products as the reason for the decrease in revenues. During the third quarter of fiscal 2015, the average spot market price for the Group II base oil we produce declined over 40 percent compared to the third quarter of fiscal 2014, Heritage stated in its news release. The decrease in revenue was partially offset by sales of recycled fuel oil, as a result of our acquisition of [FCC Environmental].

As a whole, Elgin, Ill.-based Heritage-Crystal Clean posted $2.7 million in net income, or 12 cents per diluted share, on sales of $82.7 million. That compared to $2.4 million in net income or 13 cents per diluted share, on sales of $77.9 million, in 2014s third quarter.

Joe Chalhoub, founder, president and CEO, noted the company expects to complete the expansion of its Indianapolis rerefinery to 75 million gallons of nameplate capacity during the fourth quarter. That project will make the rerefinery more efficient on a per-gallon basis. Chalhoub stated the company has led the industry the past two years in lowering amounts paid to generators for their used oil.

Moving from a pay-for-oil to a charge-for-oil model is a significant adjustment for generators and collectors, Chalhoub said in a news release, noting it is something Heritages team has done before. As of the end of September, we were able to achieve a small average charge for our used oil collection service across our customer base. This transition is a significant step in restoring spreads, which we believe will make our oil business more profitable.


BPs lubricants business reported an underlying replacement cost profit before interest and tax of $348 million in the third quarter, a 3.6 percent increase from $336 million in the same period last year.

The results for the quarter reflect strong performance in growth markets and premium brands despite adverse foreign exchange impacts, and the benefits from our simplification and efficiency programs leading to lower costs, BP said in a stock exchange announcement summarizing its results.

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