Valvoline, SK Earnings Up for Quarter


Financial results for the quarter ending June 30 saw another increase in operating income at lubricant blender Valvoline, and a strong performance by the lubricant division of South Korean base oil refiner SK Energy.

Valvoline parent company Ashland said the lube blender reported operating income of $28 million for the three months ending June 30 – the third quarter of Ashlands 2007 fiscal year – up from a $10 million loss for the same period a year earlier. Valvolines sales and operating revenues for the quarter also increased 11.2 percent over the same period a year earlier, to $407 million.

The company said that while lubricant volume in the quarter declined 4 percent, the drop was mainly in Valvolines lower-margin private-label business. According to Ashland, a more stable base oil cost environment and margin improvement enabled Valvoline to record its best third quarter since 1997, although margins as a percent of sales remained below historical levels.

Improved results from the Valvoline Instant Oil Change business compared to the previous years third quarter also contributed to Valvolines strong performance, the company said.

Our quarterly results continued to be driven by the strong performance of Valvoline, said James OBrien, Ashlandchairman and chief executive officer. We expect Valvoline to report record operating income for the full year. However, recent increases in base lube stock costs will likely temper Valvolines results in the fourth quarter.

Ashland as a whole reported net income of $100 million on revenues of $2 billion in the quarter.

SK Energys lubricants division reported a 52 percent increase in operating profit for the three months ending June 30, to 44 billion Korean won (U.S. $48.2 million), up from 29 billion won ($31.8 million) during the year earlier period. Sales for the lubricants division also rose by 45 percent to 278 billion won ($304.5 Million), up from 192 billion won ($210.3 million) during the same period in 2006.

SK Energy attributed the jump in operating profits to increased production of base oil following therecent revamp of the company’s production facilityin Ulsan, South Korea,and to a rise in base oil prices due to growing demand in European and North American markets. The company said it also improved its results through increased exports to Russia and Southwest Asia. Base oil sales in the quarter rose 64 percent over the second quarter of 2006.

Looking ahead into the remaining half of 2007, high oil prices and rising raw material costs are expected, but the company forecasts that product prices will be adjusted and overseas sales will be strengthened in the U.S., Japan and European countries, SK said.

SK Energy as a whole reported operating profit for the quarter of 399 billion won ($436.9 million) on sales revenue of 6.9 trillion won ($7.5 billion). As of July 1, SK Corp. was split into holding company SK Holdings and energy operating company SK Energy. The new entities are listed separately on the Korea Stock Exchange.

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