India’s Apar Industries saw profit from its specialty oils and lubricants unit fall for the fifth time in six quarters as high feedstock costs and currency depreciation outweighed rising revenue and sales volumes.The increasingly squeezed profit contrasted with major base oils refiners’ strong profit margins.The trend suggested that refiners had more leverage than blenders to pass on higher feedstock costs through higher prices, even in markets like India whose economy grew strongly in 2022.The depreciation of India’s currency versus the US dollar magnified the higher feedstock costs in local currency terms.Apar saw its specialty oils and lube unit’s profit before interest and tax fall to 207mn Indian rupees ($2.5mn) in the final three months of 2022. Profit fell by 67pc from year-earlier levels to the lowest since first-half 2020..Profit fell even as the unit’s sales rose by 38pc to a record-high Rs12.45bn.Sales rose on higher prices and rising total sales volumes. These increased at a slower 9pc pace to 126,730 kilolitres (112,300t).The volume amounted to 21pc of the company’s 540,000 t/yr production capacity of specialty oils and lubricants. Apar is the world’s third-largest producer of transformer oils.Revenue from its lubricants sales rose at a slower 20pc pace, even as the sales volume rose at a faster 11pc growth rate.Regional base oils feedstock prices fell in the fourth quarter of last year from the previous three months. But they remained higher than during the fourth quarter of 2021.With costs rising faster than sales, the specialty oil and lube unit’s profit margin fell to 1.7pc in the final three months of the year.Apar, whose customers include car manufacturers as well as pharmaceutical and cosmetics companies, saw the margin fall from 4.4pc during the previous quarter to the lowest since the second quarter of 2020. Apar’s share price still rose by more than 25pc so far this week after the company’s total net profit more than tripled in the fourth quarter from year-earlier levels to a record high.Total profit rose on the back of surging sales and profit in Apar’s conductor and cables units.“We witnessed volume growth across all the three divisions and the net profit tripled on a year-on-year basis,” said Apar Chairman and Managing Director Kushal N Desai.“We are optimistic about the growth prospects of our company as we believe we are appropriately placed to tap the benefits of infra-led spends, push towards renewable energy as well as China+1,” he said.Infra-led spends refers to India’s spending on infrastructure. China+1 refers to the strategy of diversifying investments in other countries besides just China..India’s Dec lube demand holds firm
India’s Apar Industries saw profit from its specialty oils and lubricants unit fall for the fifth time in six quarters as high feedstock costs and currency depreciation outweighed rising revenue and sales volumes.The increasingly squeezed profit contrasted with major base oils refiners’ strong profit margins.The trend suggested that refiners had more leverage than blenders to pass on higher feedstock costs through higher prices, even in markets like India whose economy grew strongly in 2022.The depreciation of India’s currency versus the US dollar magnified the higher feedstock costs in local currency terms.Apar saw its specialty oils and lube unit’s profit before interest and tax fall to 207mn Indian rupees ($2.5mn) in the final three months of 2022. Profit fell by 67pc from year-earlier levels to the lowest since first-half 2020..Profit fell even as the unit’s sales rose by 38pc to a record-high Rs12.45bn.Sales rose on higher prices and rising total sales volumes. These increased at a slower 9pc pace to 126,730 kilolitres (112,300t).The volume amounted to 21pc of the company’s 540,000 t/yr production capacity of specialty oils and lubricants. Apar is the world’s third-largest producer of transformer oils.Revenue from its lubricants sales rose at a slower 20pc pace, even as the sales volume rose at a faster 11pc growth rate.Regional base oils feedstock prices fell in the fourth quarter of last year from the previous three months. But they remained higher than during the fourth quarter of 2021.With costs rising faster than sales, the specialty oil and lube unit’s profit margin fell to 1.7pc in the final three months of the year.Apar, whose customers include car manufacturers as well as pharmaceutical and cosmetics companies, saw the margin fall from 4.4pc during the previous quarter to the lowest since the second quarter of 2020. Apar’s share price still rose by more than 25pc so far this week after the company’s total net profit more than tripled in the fourth quarter from year-earlier levels to a record high.Total profit rose on the back of surging sales and profit in Apar’s conductor and cables units.“We witnessed volume growth across all the three divisions and the net profit tripled on a year-on-year basis,” said Apar Chairman and Managing Director Kushal N Desai.“We are optimistic about the growth prospects of our company as we believe we are appropriately placed to tap the benefits of infra-led spends, push towards renewable energy as well as China+1,” he said.Infra-led spends refers to India’s spending on infrastructure. China+1 refers to the strategy of diversifying investments in other countries besides just China..India’s Dec lube demand holds firm
