Chevron Lubricants Lanka records 2b PAT

Chevron Lubricants Lanka PLC has recorded the highest earnings in its history with a net profit of Rs. 2b for the year 2011 up from Rs. 1.5b the previous year.

The board of directors declared three interim dividends amounting to Rs. 9 per share.

On January 6, Chevron Lanka Lubricants recorded 10 years without loss time injury and is a record for any Chevron facility in the world.

The company received global recognition from the Chevron Lubricants President and is a tribute to the efforts of all our staff, said MD Chevron Lubricants Lanka Ltd. Kishu Gomes.

The greatest challenge faced by the global lubricants industry during the year was the steep increase in the cost of base oils. The raw material cost increased in 2011. The company combatted this through a focussed pricing strategy taking a firm decision to prevent an erosion of our margins.

This was supported with a concerted marketing strategy and leveraged the strength of our brands to absorb the price increases.

This action together with improved internal efficiency and careful cost management enabled the company to significantly improve the overall profitability in 2011.

Another factor that contributed to the increase in profit was the savings created through the restructuring exercise the company undertook towards the end of 2010 in line with a Chevron downstream and chemicals initiative.

The new organisational structure resulted in a significant cost reduction. The company exports to Bangladesh and Maldives continued to do well as we increased our export volume by 30 percent and strengthened our ties with the distributors of both countries.

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 has seriously affected the transport sector and could lead to a reduction in fuel usage, which would result in a decline in the usage of lubricants.

The average consumer will 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.

Heightened competition will also continue to be a challenge for our business particularly with the possibility that the Government may issue more licences to new players in the industry.

Despite the challenges ahead we have proved ourselves as a resilient company and remain firmly committed to optimising our performance and driving our business forward.