Chevron Lubricants reports strong 3Q on robust lube sales

Chevron Lubricants Lanka PLC reported a robust performance during the three months ended in September (3Q20), as the company grew sales above both its previous quarter and the year earlier levels, indicating that it managed to recoup the depressed sales during the period affected by the pandemic, earlier this year. 

The leader in the domestic lubricant market recorded sales of Rs.3.61 billion for the quarter under review, up from Rs.2.54 billion in the previous quarter ended in June (2Q20) and Rs.3.3 billion sales in the comparable period in 2019. 

Chevron, which sells its products under Caltex and Texaco brands, apart from its namesake brand, reported earnings of Rs.3.35 a share or Rs.802.9 million for the quarter, compared to Rs.2.59 a share or Rs.622.3 million in the same period, last year. 

The stronger top and bottom lines of Chevron, which is in the business of lubricant blending and marketing business in Sri Lanka, is a vivid reflection of the broader economy, which recovered most of its lost ground during the third quarter, after it lost steam during the second quarter, due to the pandemic-related lockdowns. 

Lubricants are closely associated with the country’s power generation and industrial and agricultural sectors, as much as the inland mobility sector, which reached pre-pandemic levels during the quarter ended in September. 
The company’s cash reserve grew from Rs.870 million to Rs.2.3 billion during the nine months. But at the same time, its supplier credit grew from Rs.789 million to Rs.1.9 billion, in an indication that the company had bought more time to settle its suppliers, as a strategy to manage  liquidity. 

Despite the robust performance at its local unit in Sri Lanka, Chevron Corp. listed in the New York Stock Exchange, posted a third quarter loss of US $ 207 million, compared to a profit of US $ 2.58 billion in the comparable quarter last year, as the pandemic continues to weigh on the oil and gas industry, despite the modest recovery in the global economy and a rebound in the demand for the gasoline. 

Chevron Corp. said it would continue to cut costs next year and expects to spend around Rs.10 billion on capital expenditure in 2021. 

Chevron Corp. via Chevron Ceylon Limited owns a 51 percent stake in Chevron Lubricants Lanka PLC, while the Employees’ Provided Fund has a 0.42 percent stake in the company, being its 16th largest shareholder.