Sluggish lubricant sales appeared to have hampered the earnings of Chevron Lubricants Lanka PLC during the quarter ended June 30, 2019 (2Q19), the firm’s interim financial accounts released to the Colombo Stock Exchange, showed.
The earnings of the country’s lubricant market leader fell to Rs.1.83 per share or Rs.439.4 million for the quarter under review from earnings of Rs.2.11 per share or Rs.506.7 million reported for the same period last year.
Sales for the period fell marginally by 1 percent year-on-year (YoY) to Rs.2.7 billion while the cost of sales edged up by a similar percentage to Rs.1.7 billion.
The gross profit for the period fell 6 percent YoY to Rs.979.4 million while operating profits declined 13 percent YoY to Rs.608.3 million as both administrative and distribution expenses expanded.
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.
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.
Meanwhile, for the six months ended June 30, 2019 (1H19), the firm reported earnings of Rs.4.34 per share or Rs.1.04 billion compared to earnings of Rs.5.02 per share or Rs.1.2 billion reported for the same period last year.
Sales for the first half rose 4 percent YoY to Rs.6.01 billion while the cost of sales rose at a faster pace of 10 percent YoY to Rs.3.8 billion resulting in a gross profit of Rs.2.2 billion, down 5 percent YoY.
The operating profit for the period fell 13 percent YoY to Rs.1.4 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.
The company recently bagged government contracts to supply to three power stations and to the Sri Lanka Transport Board (SLTB).