Valvoline, SK Report Growth


Financial results for the quarter ending Dec. 31 show increased sales and operating income at lubricant blender Valvoline, and a steep rise in sales but a decline in operating profit for the lubricant division of South Korean base oil refiner SK Energy, compared to the year-ago quarter. At the SK lubricant division, bothsales and operating profits for the fullyearrose, compared to2006.

Valvoline parent company Ashland said the lube blender reported operating income of $20.1 million for the three months ending Dec. 31 – the first quarter of Ashlands fiscal year – up 10 percent from $18.2 million the same period a year earlier. Valvolines sales and operating revenues for the quarterincreased 8 percent over the same period a year earlier, to $380 million. The company said lubricant sales volume also increased from the year-earlier period, by 3 percent, to 39.9 million gallons.

Earnings from Valvoline Instant Oil change more than doubled, Ashland said, while Valvoline International achieved a record first quarter, with a nearly four-fold increase. According to Covington, Ky.-based Ashland, earnings at Valvoline Instant Oil Change were driven by a higher average ticket, representing premium oil changes and ancillary services. Premium oil changes now represent more than 50 percent of all oil changes at Valvoline Instant Oil Change centers.

Valvoline has generally been a steady contributor to Ashlands bottom line, with the exception being fiscal 2006, when severe hurricane-related supply disruptions caused base oil costs to rise faster than Valvoline could implement price increases, said James OBrien, Ashland chairman and chief executive officer. While we received two base oil cost increases effective this past December, we have responded with price increases to the marketplace, which we should begin to realize in February.

Ashland as a whole reported net income of $33 million, on revenues of $1.9 billion in the quarter.

SK Energys lubricants division reported a 35 percent decline in operating profit for the three months ended Dec. 31, to 38.8 billion South Korean won (U.S. $40.9 million), down from 60.6 billion won ($63.9 million) during the same period in 2006. Sales for the lubricants division rose 25 percent to 336.3 billion won ($354.8 million), up from 267.7 billion won ($282.4 million) during the year-earlier quarter.

For the full year, SKs lubricants division saw sales jump 26 percent to 1.1 trillion won ($1.2 billion), up from 896.6 billion won ($943 million) in 2006. Operating profits for the lubricants division for the full year reached 190.2 billion won ($200 million), up 6 percent from 178.6 billion won ($188 million) in 2006.

SK Energy attributed the results to an increase in base oil production with completion of a revamp, improved product yields from catalyst replacements, and improved sales and operating profit from stepped up exports of premium base oils.

In its financial results, SK, based in Seoul,summarized its base oil sales volumes for the quarter and year. For the quarter ending Dec. 31, 2007, sales reached 2.2 million barrels, up 44 percent from 1.6 million in the year-earlier period. For 2007, total base oil sales reached 7.6 million barrels, up 41 percent from 5.3 million barrels.

SK Energy Sales Volumes
(Unit: 1,000 barrels)





Base Oil















Source: SK Energy

SK also updated the status of its base oil joint venture with Indonesias Pertamina. The Dumai, Indonesia, plants share ratio is 65 percent SK and 35 percent Pertamina. Start-up is expected in the second half of 2008, SK said, with total capacity expected to be 7,250 b/d API Group III.

As a whole, parent company SK Energy reported operating profit for the year of 1.5 trillion won ($1.6 billion), up 27 percent from the 2006 figure. The company reported sales revenue of 27.8 trillion won ($29.2 billion) for 2007, up 18 percent from the 2006 total.

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