Financial results for the quarter ending March 31 saw operating income on the rise at lubricant blender Valvoline, and another strong performance by the lubricants division of South Korean base oil refiner SK Corp.
Valvoline parent company Ashland said the lube blender recorded operating income of $22.4 million for the three months ending March 31 – the second quarter of Ashlands 2007 fiscal year – up a whopping 1,020 percent from $2 million for the same period a year earlier. Valvolines sales and operating revenues for the quarter also jumped 8 percent over the same period a year earlier, to $382 million.
The company said that while lubricant volume in the quarter fell 5 percent to 41.8 million gallons (from 44.2 million gallons a year earlier), the decrease was essentially all from unbranded, private-label business, which carries a lower margin. Of U.S. branded sales volume, premium lubricants accounted for 23.3 percent. According to Ashland, lubricant margins and pricing actions drove results for the quarter; margins as a percent of sales remains below historical levels, however.
Valvoline achieved record operating income for the first half of 2007 and should continue to benefit from stronger margins resulting from stable base oil costs and better supply, said James OBrien, chairman and chief executive officer for Covington, Ky.-based Ashland. We expect a continuation of Valvolines recent strong results.
Ashland as a whole reported net income in the quarter of $49 million on revenues of $1.9 billion.
SKs lubricants division reported a 105 percent jump in operating profit for the three months ended March 31, to 67.7 billion South Korean won (U.S. $73 million), up from 33 billion won (U.S. $35.6 million) during the same period in 2006. Sales for the lubricants division also increased by 43 percent to 249 billion won (U.S. $268.4 million), up from 175 billion won (U.S. $188.4 million) during the same period in 2006.
SK, of Ulsan, South Korea, attributed its record-breaking quarter to expanded production capacity provided by a successful production facility revamp, and rising global demand for high quality base oils in Europe and America. The company said that base oil production rose 51 percent compared to the first quarter last year.
Finished lubricant sales of 68 billion won (U.S. $73 million) in the quarter were up 26 percent compared to the year-ago quarter. SK as a whole reported operating profit of 476 billion won (U.S. $511.2 million) on sales of 6.1 trillion won (U.S. $6.6 billion).