Profits of Sri Lanka’s lubricant market leader, Chevron Lubricants (Lanka) PLC halved during the December quarter (4Q18) amid sluggish lube sales, the year-end financial accounts released by the company showed.
The earnings for the October-December 2018 period fell to Rs.1.11 per share or Rs.267 million compared to earnings of Rs.2.29 a share or Rs.549.2 million reported for the corresponding period of the preceding year.
The revenue fell 21 percent year-on-year (YoY) to Rs.2.2 billion. The company however was able to keep its costs under check at Rs.1.5 billion, down 13 percent YoY.
Operating profit fell 50 percent YoY to Rs.368 million.
Chevron Lubricants, the blender and marketer of Caltex-branded lubricants across the country, has seen a steady decline in its market share for years, as players with price advantage gradually grabbed the share from the relatively expensive Caltex products.
Chevron Lubricant’s market share during 3Q18 fell to 37.23 percent or 6,127 kilo litres from 38.38 percent of 6,498 kilo litres in the corresponding quarter of 2017.
The company’s market share has nearly halved from its 2009 peak of 71 percent.
Sri Lanka roughly has a 65,000 kilo litre lubricant market.
With the proposed liberalization of the lubricant market, the margins and the market shares of existing players are expected to come under pressure further going forward.
Meanwhile, for the year ended December 31, 2018 (FY18), Chevron Lubricants reported earnings of Rs.8.28 per share or Rs.2 billion compared to Rs.10.64 per share or Rs.2.5 billion reported for FY17.
The revenue for the year under consideration fell 2 percent YoY to Rs.10.9 billion, while cost of sales rose 7 percent YoY to Rs.6.8 billion.
Chevron Ceylon Limited has 51 percent of the company’s issued shares.
Chevron Lubricants is in the business of importing, blending, distributing and marketing of lubricant oils and greases. Chevron Lubricants Lanka recently bagged government contracts to supply to three power stations and to the Sri Lanka Transport Board (SLTB).