Chevron posts highest ever Rs 2 b net profit

Chevron Lubricants Lanka PLC achieved a milestone in its financial performance, recording the highest earnings in its history with a net profit of Rs. 2 billion for the 2011 year up from Rs. 1.5 billion the previous year.

Chevron Lubricants Lanka PLC continues to be one of the best performing shares on the Colombo Stock Exchange. “In the year under review, the Board of Directors declared three interim dividends amounting to Rs. 9 per share,” said Chairman Chevron Lubricants Lanka, Farrukh Saeed.

“During the year, we had to contend with a sharp increase in global oil prices. The company’s healthy financial performance was achieved in spite of this, through sound management decisions, strong marketing efforts, and a focus on cost management. We also benefited from the Government’s policy decision to reduce corporate tax from 35% to 28% , an encouraging move towards improving Sri Lanka’s position in terms of global competitiveness, “he said.

Another highlight of the year was the visit of Danny Roden, President of Chevron Lubricants, to Sri Lanka. This was the first occasion of a visit by the head of Chevron Lubricants.

Managing Director/CEO, Dr. Kishu Gomes said that Chevron was once again the only company in the petroleum industry to be listed among the prestigious Business Today Top 20. “I am also delighted to share a milestone achievement in operational safety. True to our motto, ‘Do it safely or not at all,’ on January 6, 2012 Chevron Lanka Lubricants recorded ten years (3,652 consecutive days) without loss time injury. This is a record for any Chevron facility in the world, for which we received global recognition in the form of an accolade from the President of Chevron Lubricants , and it is a tribute to the efforts of all our staff.”

The greatest challenge faced by the global lubricants industry during the year was the steep increase in the cost of base oils. Our raw material cost in 2011 increased significantly. We combated this through a focused pricing strategy, taking a firm decision to prevent an erosion of our margins. This was supported with a concerted marketing effort, and we leveraged the strength of our brands to absorb the price increases. These actions, together with improved internal efficiencies and careful cost-management (including savings generated through synergies with our outsource partners), enabled us to significantly improve our overall profitability in 2011. The company also benefited from a reduction in corporate taxation from 35% to 28%.

The most serious issues we will face in the year ahead are expected to be linked to the volatility of the economy. The sudden depreciation of the rupee during the first two months of 2012, and the attendant jump in the cost of imported goods, including oil, will affect our industry both directly and indirectly. The steep hike in fuel prices in February (with increases of 8.75% on petrol, 36% on diesel and 49% on kerosene) has seriously affected the transport sector and could lead to a reduction in fuel usage, which in turn would result in a decline in the usage of lubricants. The average consumer will also have to contend with price increases in a range of goods during the months ahead, and will have less disposable income to spend on non-essentials.