Don't Miss
an Issue.

Subscribe to Lube Report,. This FREE weekly e-newsletter features breaking news and base oil price reports.

April 26, 2017

Volume 17 Issue 52

    View Printer Friendly Article Bookmark and Share

Q1 Earnings Wrap-up

Valvoline reported increased operating income, while operating profits were down for South Korean base oil refiners SK Lubricants and S-Oil for the quarter ended in March, compared to a year earlier.

Valvoline

Valvoline Inc. posted operating income of $117 million for its three operating segments – North America, quick lubes and international – for the fiscal quarter ended March 31, up 12.5 percent from $104 million in the year-earlier period.

The three segments posted total sales of $514 million for the quarter, up 7 percent from a year before. The core North America segment accounted for about 49.2 percent, quick lubes for 24.9 percent and international for 25.9 percent of sales.

North American lubricant sales volume declined 5 percent to 24.6 million gallons, compared to a year earlier. In its earnings release, the company said branded volumes were consistent with the prior year, offset by the decline of lower-margin, non-branded business that lead to the overall volume decrease for the segment. Valvoline noted that it announced price increases across all channels in core North America to offset rising raw material costs.

Lubricant sales through the company’s quick lubes grew 14.6 percent to 5.5 million gallons.

Valvoline Instant Oil Change ended the quarter with 1,108 stores overall, an increase of 56 from a year earlier.

International lubricant sales – excluding unconsolidated joint ventures – grew almost 13 percent to 14.9 million gallons for the quarter. “Volume gains in international were broad based across both developed and emerging markets, primarily driven by the success of our ongoing channel development efforts,” Valvoline CEO Sam Mitchell said in the company’s earnings news release.

In September 2015, Ashland announced plans to spin off Lexington, Kentucky-based Valvoline. In September last year, an initial public offering raised about $759 million. After the IPO’s completion, Ashland owned 170 million shares, representing 83 percent of total outstanding shares of Valvoline’s common stock. Prior to the IPO, Ashland held nearly all of the assets and liabilities related to Valvoline’s current business.

On Tuesday, Valvoline provided an update on its final separation from Ashland, announcing that the board of directors of Ashland Global Holdings Inc. approved the distribution of all of its remaining interest in Valvoline to Ashland stockholders, subject to various conditions, with May 12 as the distribution date.

SK Lubricants

SK Lubricants reported first-quarter operating profit of 94.9 billion South Korean won (U.S. $84.1 million), down 28.2 percent from 132.2 billion won in 2016’s first quarter.

Revenue for the quarter reached 728.6 billion won, up 17.1 percent from 622.3 billion won in the year-earlier period.

In its earnings presentation, the company said it expected its base oil business’s profits to improve in the second quarter, as base oil product prices reflect tight supply and demand. The company also expected base oil spreads to improve because of steady demand growth.

S-Oil

S-Oil’s lube base oil segment reported first quarter operating income of 84.1 billion won (U.S. $74.1 million), down 34.1 percent from 127.5 billion won in 2016’s first quarter.

First quarter revenue increased 18.2 percent to 384.7 billion won, up from 325.4 billion won.

In its earnings presentation, the refiner said it expected the improved lube base oil margin in the first quarter to advance further because of the demand growth for high-quality products in the United States and Europe, ahead of the peak season.