20 February 2008 20:24 [Source: ICIS news]
Already, high oil prices have squeezed margins for the company.
Fourth-quarter cost of sales were $409m (€278m), up 26% from $325m reported for 2006. The rate of cost increases outpaced fourth-quarter sales, which rose 18% year-on-year.
Fourth-quarter operating income was $10m, down 60% from $25m reported for 2006, the company said.
Calumet has already issued price increases to pass through rising oil costs.
However, those increases addressed oil prices in the mid $90s/bbl, said Jennifer Straumins, who oversees Calumet's investor relations. Straumins made her comments during a conference call that reviewed the company's fourth-quarter earnings.
Since Calumet's last price hike, crude prices have set new records, breaking $100.
Oil prices would have to remain near $100 before Calumet would attempt another round of price increases, Straumins said. Altogether, it could take the company 4-6 weeks to pass through the increases.
In addition, Calumet and other producers are struggling with their asphalt product lines, Straumins said. "There is quite a bit of asphalt on the market right now, and the fourth quarter is typically a slow quarter for that product line," she said.
In other news, Calumet now expects to spend an additional $80m on the expansion at its refinery in Shreveport, Louisiana, said Bill Grube, company chief executive. The extra money will prevent further delays and bring the cost of the project to $300m.
Initially, the plant was supposed to be completed by the end of December, Grube said. Instead, the project dragged into the first quarter of this year.
Production should come start in the second quarter, Grube said. The expansion will increase the capacity of the Shreveport refinery to 57,000 bbl/day, up by 15,000 bbl.
Shares of Calumet were trading on Wednesday at $35.04, down 6.06%.
($1 = €0.68)For more on base oils visit ICIS chemical intelligence
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