Chevron gets tailwind from growing economy in 1Q25

Chevron Lubricants Lanka PLC reported 5.0 percent higher revenues for the three months ended March 2025, reaching Rs.7.39 billion. 

This reflects a steady improvement in its business, driven by increased mobility levels and rising industrial activity amid a recovering economy.

On a quarter-on-quarter basis, revenues jumped by a significant 60 percent from the Rs.4.62 billion recorded in the fourth quarter of 2024 (4Q 2024).

As the economy and incomes grow, vehicle owners tend to spend more on high-quality lubricant products for their engines and engage in periodic oil changes and maintenance. The economic crisis in 2022 and its aftermath had forced people to defer oil changes or extend intervals between them, as runaway prices eroded their real incomes. This also prompted a shift to lower-quality engine oils, with many prioritising essential spending over vehicle maintenance.

Chevron engages in importing, blending, distributing, and marketing lubricants and greases. The company has long maintained its market leadership in the lubricant business, despite challenges to its market share from numerous competitors over the years.

The February reopening of vehicle imports could also provide a tailwind for the company’s top-line in the coming quarters. The quarterly jump in revenues points to growth in both mobility levels and the overall economy, with rising industrial activity demanding more lubricants.

However, the company’s cost of sales rose by 7.0 percent to Rs.4.79 billion, a slightly faster pace than revenue growth. This contained gross profit growth to just 1.0 percent, or Rs.2.61 billion, for the quarter. A 17.0 percent rise in distribution costs further dented operating profits, reducing them by 2.0 percent to Rs.1.85 billion for the quarter.

Meanwhile, finance income fell sharply by 61 percent to Rs.50.35 million, while finance costs rose by a modest 5.0 percent to Rs.20.38 million.

The company reported earnings of Rs.5.49 per share, or Rs.1.32 billion, for the January – March quarter, compared to Rs.5.84 per share, or Rs.1.40 billion, in the corresponding period last year.

On Friday’s trading, the company’s shares added 1.16 percent, or Rs.1.75, to close at Rs.152.00.

Chevron Ceylon Limited holds 51.0 percent stake in Chevron Lubricants Lanka PLC.