Financial results for the quarter and year ending Sept. 30 saw a rise in operating income at lubricant blender Valvoline, with a big boost from Valvoline Instant Oil Change. Meanwhile, the lubricant division of South Korean base oil refiner SK Energy saw a decline in operating profit for the quarter.
Valvoline parent company Ashland said the lube blender reported operating income of $17.9 million for the three months ending Sept. 30 – the fourth quarter of Ashlands fiscal year – up from a $14.6 million loss for the same period a year earlier. Valvolines sales and operating revenues for the quarter increased by 1 percent to $384 million.
A 14 percent increase in the number of premium oil changes and 12 percent increase in average ticket in the Valvoline Instant Oil Change business versus the prior-year quarter contributed to Valvolines strong performance, the company said.
For the fiscal year ending Sept. 30, Valvoline had operating income of $86 million, up from a $21 million loss for the 2006 fiscal year. Sales and operating revenue for the 2007 fiscal year swelled 7 percent to $1.5 billion, from $1.4 billion in 2006.
The company said that lubricant volume increased 5 percent for the quarter compared with the year-earlier amount, with growth in international and branded lubricant volumes offsetting a decline in Valvolines lower-margin, private-label business. Gross margin improvement across all business lines, supported by a more stable base oil cost environment, drove Valvolines results for the quarter, according to Ashland.
Valvoline again was the largest contributor to our quarterly results and achieved record operating income of $86 million for the full fiscal year, said James OBrien, chairman and chief executive officer of Covington, Ky.-based Ashland.
Ashland as a whole reported net income of $32 million on revenues of $2.1 billion in the quarter. For the fiscal year, Ashland totaled $230 million in net income on $7.8 billion in revenues.
SK Energys lubricants division reported a 28 percent decline in operating profit for the three months ending Sept. 30, to 40.2 billion Korean won (U.S. $44.3 million), down from 56.2 billion ($62 million) won during the year-earlier period. Sales for the lubricants division rose by 3 percent to 269.9 billion won ($297.6 million), up from 262.8 billion ($289.8 million) during the same period in 2006.
SK Energy attributed the decrease in operating profits to high raw material costs due to the rise in crude oil prices, and to selling, general and administrative expenses. The company said increased export sales volumes contributed to the rise in sales. Base oil sales volume in the quarter rose 10 percent over the third quarter of 2006.
As a whole, SK Energy reported operating profit for the quarter of 418.4 billion won ($461.3 million) on sales revenue of 6.7 trillion won ($7.4 billion).