Valvoline weathers COVID-19 impact

Lubricant producer and distributor, Valvoline, has reported financial results for Q4 2020 and the fiscal year ended 30 September 2020.

The business markets its products in more than 140 countries and is based in Kentucky, US.

“During the pandemic, our focus has remained on the health and safety of our employees, customers and business partners,” said Valvoline CEO, Sam Mitchell.

“Our strong performance in Q4 continues to demonstrate the durability of our business and the tremendous efforts of the entire Valvoline team, who have adapted to these unprecedented times to continue delivering superior customer service.

“We saw strong sequential and year-over-year improvements in profitability in Quick Lubes and Core North America and exceptional sequential profitability improvement in International in Q4.

“Our results this quarter significantly exceeded our expectations and demonstrate the true resiliency and competitive advantages of our business model. Quick Lubes’ system-wide same-store sales grew 8.3 per cent in Q4, returning to pre-COVID-19 growth rates as share gains continue.

“Core North America generated near-record quarterly profitability driven by ongoing performance in the retail channel and benefits from lower raw material costs. An increased contribution from key markets and improved margins drove the strong sequential growth in international profitability.

“Looking forward to fiscal 2021, we expect to generate low double-digit growth in adjusted EBITDA. Our confidence in this continued growth is driven by our diversified business model that is expected to generate approximately half of its adjusted EBITDA from our quick lubes segment,” he said.

Reported net income for Q4 2020 was $122 million USD, with an adjusted EBITDA of $150 million USD, up 16 per cent, while full-year net income was $317 million USD with an adjusted EBITDA of $510 million USD, up 7.0 per cnet.

Sales for the year declined 2.0 per cent to $2.35 billion USD. Lubricant volume declined 6.0 per cent to 168.0 million gallons.

The international segment, which Australia operates in, revealed a sales decline of 1.0 per cent to $146 million USD and a 2.0 per cent decline in lubricant to 14.8 million gallons. Operating income of $23 million USD decreased $1.0 million USD. Adjusted operating income increased $3.0 million USD and adjusted EBITDA increased $2.0 million USD to $25 million USD.

Volume and profit in the international segment improved sequentially versus Q3 across all regions.

“Versus the prior-year period, the volume decline for the quarter was in Latin America and EMEA, where recovery is lagging primarily due to extended COVID-19 impacts,” Valvoline said in a statement. “Partially offsetting this decline was solid volume growth in the Asia-Pacific region, including China and Australia. Volume in unconsolidated joint ventures grew modestly driven by strong growth in China partially offset by weakness in India, where the effects of COVID-19 continue to be more severe.”

Valvoline said a favourable geographic mix, improved margins and increased profit contribution from unconsolidated joint ventures more than offset lower volumes, leading to a 9.0 per cent increase in adjusted EBITDA.

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