Chevron Lubricants loses momentum in 2Q as virus-related restrictions return

After a solid start for the year, Chevron Lubricants Lanka PLC appears to have lost momentum in the June quarter (2Q21), largely due to pandemic-related restrictions.  

The market leader in lubricant blending and sales reported revenues of Rs.2.8 billion for the three months to June 2021 compared to Rs.2.5 billion in the year earlier period, logging 9.0 percent growth. 

However, June quarter revenues marked a sharp drop from the Rs.4.4 billion in revenues registered in the first quarter that ended in March, which surged by 53 percent from the same period in 2020. 

The initial demand for company’s namesake lubricants and others under Caltex and Texaco brands was fuelled by the restoration of economic normalcy after months long pandemic-induced restrictions.

However, this euphoria faded from around mid-April with fresh restrictions on travel and other economic activities being imposed, which led sales and profits to languish. 

For instance the company’s operating profit of Rs.578.8 million for the quarter under review was identical to that of the same period last year, which was characterised by even harsher virus-related restrictions. 

The company reported earnings of Rs.1.92 a share or Rs.461.2 million for the quarter under review compared to earnings of Rs.1.78 a share or Rs.427.0 million in the corresponding period last year. 

The local unit of the global energy giant engages in both upstream and downstream operations as it is engaged in importing, blending, distributing and marketing of lubricant oils and greases for vehicles and industrial use. 

Chevron commanded a market share of 41.51 percent of the Sri Lankan lubricant market as of the third quarter in 2020.  

Chevron Corp. via Chevron Ceylon Limited owns 51 percent stake in Chevron Lubricants Lanka PLC, while Employees’ Provident Fund has 0.42 percent stake in the company being its eighteenth 
largest shareholder.