Chevron Lubricants 1Q net down 14% despite higher top line

Chevron Lubricants Lanka PLC March quarter (1Q19) earnings fell 14 percent year-on-year (YoY) to Rs.603.1 million despite higher lube sales, the interim financial accounts released to the Colombo bourse this week showed.

The revenue during the quarter under review rose 10 percent YoY to Rs.3.3 billion. But the gross profit fell 4 percent YoY to Rs.1.2 billion as cost of sales rose 19 percent YoY to Rs.2.05 billion.

Operating profit for the period fell 13 percent YoY to Rs.837.1 million.

The earnings per share for the quarter was Rs.2.51 compared to Rs.2.91 reported for the corresponding quarter of the previous year.

Chevron Lubricants was the first company to release March quarter financial accounts to the Colombo Stock Exchange.

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. 

Chevron Ceylon Limited has 51 percent of the company’s issued shares.

Chevron Lubricants Lanka recently bagged government contracts to supply to three power stations and to the Sri Lanka Transport Board (SLTB).