SK Lubricants’ 2Q sales boost profit

SK Lubricants, the lubes unit of South Korean refiner SK Innovation, saw its sales rise to a record high in the three months to the end of June. This helped to boost profit from the first three months of the year, although it fell from year-earlier levels for a fourth straight quarter.

The unit's operating profit reached 78.2bn won ($64.57mn) in the second quarter. Profit rose by 66pc from W47.1bn in the first three months of the year, but fell by 38pc from year-earlier levels.

Shrinking profit has contrasted with a sustained rise in sales over the past two years to record-high levels. Revenue of W846.8bn in the second quarter rose by 12pc from the first three months of the year and by 4pc from year-earlier levels.

Revenue got a boost from a rise in the unit's sales volume. This helped to counter the effect of squeezed margins and to boost second-quarter profit compared with the first three months of the year.

European Group III 4cst base oil prices averaged $879/t in the second quarter of the year, down by 4.5pc from $921/t in the first quarter. North Sea Dated crude prices rose to $518/t in the second quarter, up by 10pc from $470/t in the first three months of the year.

The boost from higher sales and sales volume and a drop in inventory-related losses helped to lift the unit's operating profit margin to 9.2pc in the second quarter, up from 6.2pc in the three months of the year. But this was still down from 15.4pc in the same period last year.