Q3 Earnings Wrap-up


Valvoline reported increased operating income, Nynas posted an increase in sales and Cosans lubricant business segment reported higher net revenue, all for the quarter ending Sept. 30.


Valvoline reported an operating income of $99 million combined for its three operating segments – North America, quick lubes and international — for its fourth fiscal quarter ending Sept. 30, up 3.1 percent from a year earlier. The Lexington, Kentucky-headquartered companys three operating segments posted a 10.7 percent increase in sales to $547 million for the three-month period.

Fourth quarter results were driven by strong same-store sales in Valvoline Instant Oil Change, growth in premium product mix and continued volume gains in the international markets, the company said in a press release.

For its fiscal year, operating income for the three segments increased to $405 million from last years $403 million. Combined sales for the three segments for the fiscal year grew to $2.1 billion, an 8 percent increase from the previous fiscal year.

The strength of the business model was especially evident in 2017, delivering record segment operating [earnings before interest, taxes, depreciation and amortization] and strong free cash flow during a year with significant raw material cost inflation and [selling, general and administrative expenses] investments, said Valvolines Chief Executive Officer Sam Mitchell.

When discussing fiscal 2018, Mitchell said, We are well positioned to continue to protect and grow unit margins and gain share across our segments. We plan to add significantly more stores in VIOC through new company stores, franchise store expansion and acquisition.

Valvolines total lubricant sales volume grew 2 percent to 45.6 million gallons this quarter. Sales reached 179.7 million gallons for the full fiscal year, up 3 percent.


Nynas naphthenics business segment posted a 46.8 percent fall in EBITDA to 141 million Swedish krona (U.S. $16.8 million) during its third quarter. The company cited supply problems out of the Isla refinery in Curacao into the Americas and external third-party sources as leading causes for the drop.

External sales for the Stockholm, Sweden-based company grew to 1.8 billion krona, a minor increase from last years 1.7 billion krona, a result of higher crude oil price and sales volume.

Though the company did not perform as well as expected in the Americas due to supply constraints, sales volumes in Europe, the Middle East, India and Africa were larger than anticipated. Sales volume in Central Europe, Germany and India as well as China and Indonesia set records for single quarter sales.

Given the Petroleos de Venezuela S.A. (PdVSA) shareholding, Nynas was to some extent affected by the U.S. sanctions imposed on August 24th, 2017, against Venezuela by the U.S. Department of the Treasury. The sanctions are targeting new financial debt where a U.S. person or [U.S. dollar] is involved. They are not targeting any commercial purchases of crude oil from Venezuela or the sale of any product derived thereof. As a consequence, Nynas commercial relationship with PDVSA for the purchase of crude oil and products is not being affected, Gert Wendroth, president and CEO of Nynas, noted in a press release.

Nynas is co-owned by Neste Oil and 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 barrels per day of naphthenic capacity and 5,000 b/d of paraffinic API Group I capacity.


Moove, Cosans lubricants segment, posted net revenue of 534 million Brazilian reais (U.S. $162.8 million) for the third quarter, up 15.2 percent from a year earlier. The company attributed the increase to higher sales volume and better sales mix.

Lubricant sales volume grew 11 percent to 93,000 cubic meters in the third quarter, reflecting the business strategy focused on increasing the automotive and industrial customer base, including strengthening share in Brazils carmaker market, Cosan said in its earnings news release.

The company said Brazils lubricant market as a whole slightly recovered total sales volumes for the second consecutive quarter, as a reflection of the improvements observed in some economic indicators such as production, sales of vehicles and economic activity.

Sao Paulo, Brazil-based Cosan, a producer of sugar and ethanol products since 1936, expanded through acquisitions beginning in 2008 to become a distributor of fuels and lubricants.

Novvi LLC, a joint venture formed by Cosan and U.S. research firm Amyris, develops renewable synthetic base oil from sugarcane. In July 2016, American Refining Group announced a 33.3 percent equity investment that made it an equal partner with the other two companies. Chevron and H&R Group USA have also made equity investments for undisclosed amounts in the joint venture.

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