Lubricants industry suffers low-growth in 3Q | Daily News


Lubricants industry suffers low-growth in 3Q

The lubricants industry was challenged by low growth in the overall economy, a downturn in vehicle ownership, registrations, limited new construction activity, Chevron Lubricants Lanka Managing Director,Chief Executive Officer Pat McCloud said in company’s Annual Report- 2019.

The lubricants industry experienced de-growth in the first three quarters of the year in review versus the same period in the prior year.

These factors, along with the extreme weather patterns and heavy rains in the second half of the year lowered demand for lubricants. Sri Lanka’s lubricants market reflected a de-growth of 9% during the first half of the year under review (as per the Public Utilities Commission of Sri Lanka ( PUCSL)), but the industry grew in the third quarter by 4% over the same period prior year. However, optimism dampened in the fourth quarter as the market slowed in advance of the Presidential Election, and reduced purchasing by the trade in anticipation of tax reductions by the new government.

The latter months of the fourth quarter were characterized by increased political stability and an uptick in business sentiment across many industries.

Overall, the Company’s volumes and revenue grew by 8% and 9%, respectively over 2018. Net Profit after Tax increased by 5% during the same period to Rs 2,099 million. Rs 107 million higher than Rs. 1,992 million achieved in 2018. “We are pleased with the company performance in the face of the challenges in FY2019. Our commitment to contributing to the economic health of Sri Lanka remains steadfast. When the newly elected government lowered Value Added Tax (VAT) and did away with the Nation Building Tax (NBT), the Company was quick to pass on the benefits to the trade and to consumers while many of the competitors kept the savings for their own coffers,” McCloud said.

An increase in distribution expenses was seen by as much as 24% during the year under review primarily due to additional expenditure on advertising, sales and promotional activities during the year under review.

“Amidst the shrinking marketplace, our products, people and strategies enabled growth across most of our business segments.” The resilient performance can be observed in market share results as reported by the PUCSL’s provisional 3Q Lubricant Market Report, Chevron’s market share on a relative basis rose from 39 percent to 43 percent (Source: PUCSL) for the first nine months of the year. (IH)

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