SK Lubricants posted operating profit of 47.1 billion won (U.S. $40.4 million) during the first quarter this year, its parent company SK Innovation announced last week. Thats down more than 63 percent from 128.6 billion won in 2018s first quarter. Quarterly sales recorded 756.5 billion won, a 3 percent drop from 779.8 billion, SK said in its earnings report.

The energy giant said that SK Lubricants first quarter operating profit declined due to seasonal decrease in sales volume. As for the second quarter, performance is expected to improve with seasonal demand recovery despite prolonged global economic downturn.

S-Oil

S-Oil said it earned 27.2 billion won of operating income from its base oil business in the first quarter, down almost 68 percent from 84.1 billion won the previous year. Revenue also declined to 365 billion won, almost 4 percent down from 379.5 billion won a year earlier, the Seoul-based refiner announced last week.

The lube base oil spread declined due to sluggish demand and oversupply from new capacity addition in the region, S- Oil said. The base oil spread has fallen more than 40 percent, or $20 per barrel, in the Asian market.

During the second quarter, the spread is expected to recover on the back of planned maintenance of major competitors and an increase in seasonal demand, the company said in the earnings report. The report also forecast that API Group II and III base oil supply growth would take a downturn, whereas demand growth would be steady for the coming years.

Hyundai Shell Base Oil

Hyundai Oilbank said its base oil joint venture with Shell recorded operating profit of 600 million won in the first quarter. Thats a 98 percent plunge from 31 billion won in the same period last year. The j.v. recorded sales of 209.3 billion won, up almost 8 percent from 194.2 billion won the previous year, Hyundai announced this week.

Hyundai attributed the drop in profit to a tightened base oil spread. It said the spread between 150 neutral and high-sulphur fuel oil has dropped more than 43 percent to $193 per ton in the first quarter this year from $341 last year.

China, the main importer of our products, has shown sluggish demand for base oil, which has kept product price weak, a Hyundai official said in the companys earnings report conference call.

Looking ahead to the second quarter, he said base oil price, which would lag behind crude price, could rebound to see improvement in our business performance.

Castrol India

Castrol India Ltd. reported its first-quarter net profit rose about 2 percent year-on-year to Rs 185 crore (Rs 1.85 billion or U.S. $26.5 million), driven by higher revenue during the period.

Revenue from operations increased 5.3 percent to Rs 976.2 crore in the quarter that ended March 31, the lubricant maker said in a regulatory filing.

In a tough environment, which witnessed softening of economic indicators, sluggish demand and higher input costs, we have been resilient to grow our revenue from operations, Managing Director Omer Dormen said. The company experienced a strong topline improvement driven by factors such as growth in the personal mobility space and new premium products during the quarter, he added.

Dormen noted the company was able to protect its margins quarter-on-quarter through prudent cost control initiatives, strategic sourcing and better product mix management.

The Mumbai-based firm said personal mobility continues to be a key strategic driver for growth in power brands and synthetics.

Total expenses rose 6.3 percent to Rs 709.7 crore during the quarter.

Castrol, which plans to boost the capacity of its Silvassa plant, said the first phase of expansion has started. As reported, the company plans to invest around Rs 140 crore to expand the blending plants capacity by 50 percent by 2021 to adapt to the changing landscape of the Indian lubricant market and to meet growing demand.

With production capacity of 100 million liters per year now, the plant currently produces about 80 million liters annually.

Hi-Tech

Pakistans Hi-Tech Lubricants Ltd. reported its third-quarter net profit plunged 98 percent year-on-year, as an increase in finance costs and taxes more than offset the impact of higher sales.

The Lahore-based blender posted a consolidated net profit of Rs 2.5 million (U.S. $17,807) in the quarter that ended March 31, down almost 98 percent from Rs 120 million in the year-ago period, according to its regulatory filing.

Finance costs more than doubled to Rs 97.2 million from Rs 36.3 million a year ago and taxes surged nearly 71 percent to Rs 60.4 million. Total expenses rose a little over 2 percent to Rs 268.3 million during the quarter.

The company, which distributes SK Lubricants Zic brand of finished lubes, reported net sales increased 19.5 percent to Rs 1.6 billion.

For the July 2018 to March 2019 period, Hi-Tech posted a net loss of Rs 269.4 million as compared with a net profit of Rs 632.2 million a year ago. Net sales declined more than 13 percent to Rs 5.8 billion.

Chief Executive Hassan Tahir noted uncertainty in the economy persists, while a rapidly depreciating rupee and increases in interest rates continue to impact the market.

The passenger car motor oil segment, which represents the bulk of the company’s revenue, has largely recovered, and the company is cautiously optimistic for the next quarter, Tahir added.

Tahir also said its locally blended products under the Zic brand have attracted favorable public response, and the company is planning for the addition of more variants in the local blending line.