Nynas posted lower operational cash flow for its naphthenics unit during the third quarter compared to a year earlier, citing factors such as lower margins and lower oil price levels.
Nynas naphthenics business unit, which supplies mostly base oils, reported earnings before interest, taxes, depreciation and amortization of 265 million Swedish krona (U.S. $28.5 million) for the three months ending Sept. 30, down 21.1 percent from the same period in 2015.
Referring to combined results, President and CEO Gert Windroth noted in the companys interim report that the third quarter was a difficult one for Nynas and financial performance remained below expectations. This is due to lower margins and the effects of the delayed Harburg refinery start-up becoming fully visible, Windroth stated. Expensive additional purchases of intermediate feed stock and finished products led to reduced margins from increased costs as a consequence of extraordinary logistic efforts to mitigate the shortfall of production. However, these measures were needed to keep negative supply consequences for our customers at a minimum.
External sales for Nynas naphthenic business unit declined to 1.7 billion Swedish krona in the third quarter, down 20.7 percent from 2.1 billion krona in the year-earlier period.
In its interim report, the company said the decline was a consequence of lower oil price levels. The overall sales volumes were 8 percent above the equivalent period in 2015, and were somewhat constrained by available supply rather than sales opportunities, Nynas stated.
The company said strong sales volume growth was seen in Europe and in Asia, the Middle East and Africa compared to the same period in 2015, driven by volume growth across both regions as a whole. Sales volumes in the third quarter in the Americas remained steady compared to the same period in 2015, according to Nynas, mainly due to supply restrictions. Sales increased in Brazil, Canada and Mexico, but decreased in the remaining countries.
Nynas operates a plant in Nynashamn, Sweden, with 7,600 barrels per day of naphthenic base oil production capacity. The companys Harburg, Germany, plant has capacity to make 6,300 b/d of naphthenic base oil.
Neste Oil and Petroleos de Venezuela S.A. (PdVSA) are co-owners of Nynas, 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.