Citing higher costs, BP reported that profits for its Castrol Lubricants business fell 37% in the first quarter, while Luberef posted a 47% jump in net income for the quarter, driven by higher crack margins for base oils, mainly as a result of feedstock price reductions.
Castrol
BP said its Castrol unit had an underlying cost profit before interest of $161 million in the fourth quarter, off from $256 million in the same quarter in 2022. The company attributed lower results “primarily due to higher costs, including employee costs, partially offset by higher margins.”
Capital expenditure for the Castrol unit dropped rose 31% to $68 million.
Overall BP’s underlying replacement cost profit before interest and tax for the first quarter rebounded to $8.2 billion, compared to a $20.4 billion net loss compared to the same period of 2022.
Luberef
Luberef, formally known as Saudi Aramco Base Oil Co. – reported net income of 446 million riyals (U.S. $119 million) for the first quarter, improving from 303 million riyals. “This increase is mainly driven by an increase in base oil prices of 6% and a reduction in feedstock prices by 46%, compared to the same quarter last year,” the company said in its earnings announcement.
Operating Profit for the quarter increased 12% to 474 million riyals, compared to 422 million riyals, driven by higher crack margins.
The improved profits came in spite of a 34% decline in sales revenue to 2.7 billion riyals. The positive increase in profits was “offset partially by a reduction in sales volume by 14% compared to the same quarter last year,” Luberef noted.