Valvoline’s Oct-Dec profit higher

OREANDA-NEWS. Valvoline, the lubricant unit of US-based chemicals manufacturer Ashland, saw its profit and margins rise strongly in the last three months of last year amid slumping feedstock costs.

The unit's operating profit rose by 10.7pc during October-December from a year earlier to \$83mn. The increase outpaced the 1.2pc rise in sales to \$492mn. Its profit margin rose by 2.2 percentage points to 33.3pc, the strongest level in five years.

Margins rose following the 29pc slump in US base oil posted prices during the second half of last year. US Group II spot prices fell by an even steeper 33pc. Valvoline's time lag between changes in base oil prices and changes in lube prices has shortened, helping to improve its earnings stability.

Major US lubricant blenders have announced price cuts in recent weeks with effect from the start of this year. But the size of the cuts has been smaller than the drop in base oil prices.

Valvoline's sales rose on the back of firm growth in lubricant sales. This helped to counter a slowdown in demand in international sales caused by distributor destocking and weakness in the market for heavy-duty lubricants.