State of the Nation
by E. W. Phares II
We have now completed the full year and I’m very pleased to report that although total sales were behind last year, they were over $1 million ahead of our plan. Our consolidated pretax income was behind plan by approximately $900K primarily due to raw material increases that we were not able to pass through rapidly enough to overcome the increases.
Sales and income in Canada were ahead of plan due to continued dramatic growth in the tar sands area, as well as continued supermarket business, although we were not awarded the contract in supermarkets. All other market areas continue to do well in Canada and we are extremely bullish about 2012.
Sales at Penetone continue well behind plan, as well as our operating profit. Dramatic increases in raw materials, especially d’limonene had a large, negative impact on our financials. We have been able to pass on many of our cost increases including d’limonene and we do anticipate that sales and operating profits will improve in the coming year. Sales to the military are anticipated to drop due to the reduced military activities in the Middle East, however, we anticipate these sales will be counterbalanced by increased sales in pulp and paper, not only in the U.S. but in China and South America.
Petron had an excellent year with sales nicely ahead of 2010 and plan. Operating income was also strong, however, slightly behind plan. Sales growth in China and India are doing extremely well and we now have Petron personnel physically located in both countries which is helping our growth considerably. 2012 looks quite promising for Petron with continued growth in the U.S. and offshore.
Although we continue to add more customers in all three corporate areas, there is continued concern about the economic climate not only in the U.S. but also Western Europe. China seems to be having a slow-down, which will negatively affect us, as well as the nation’s gross domestic product. Continued tight cost control and intensive marketing action on all of our parts will help counterbalance what drop-off might occur and we are optimistic about 2012.
May I take this opportunity to thank each and every one of you for your continued hard work and commitment for our sustained growth in 2012.
2011 Successes Despite Considerable Challenges
By John McHale
Petron had a challenging yet very profitable 2011.Let me start with a few of the challenges: Unfortunately, our reportable lost time injury record of 4,096 days (11 years, 81 days) came to an end in March when one of our employees pulled a muscle in his back while moving pails.
As far as injuries or accidents go pulling a back muscle is certainly on the mild side in the big scope of things but I was disappointed nevertheless to have our phenomenal streak come to an end. We are still very grateful that nobody was severely hurt in 2011.
Raw material price increases were frequent and significant throughout 2011. We received 6 different price increases from our major base oil provider not to mention the multitude of increases we received from additive and container suppliers. The base oil increases alone accounted for more than a 25% increase in our costs. The bottom line is that our margins suffered as a result of the size and frequency of price increases.
On the positive side of the ledger: Our customer satisfaction metrics were outstanding. We reached an on time shipment percentage of 99.5%. Our customer complaints were <0.5%. Our first time through batch percentage was 98.5 %. We passed our ISO 9001:2008 recertification audit with no major findings whatsoever.
We continued to make major inroads in the shovel business throughout the world in a large part owing to our Petro Tac EP Premium product line which continues to produce terrific results with extended component life on electric rope shovels.
Our core mining sectors of iron, copper, gold, coal and power were very strong in 2011 with huge demands put on them for production output which redounded in a need for our specialty lubricants.
Our 3rd party toll blending business saw some substantial growth due to a pickup in the general manufacturing economy as well as some additional new products we started to make in 2011.
I am proud to report that we set an all-time record for sales and operating income in 2011. My heartiest thanks and appreciation go out to all of the Petron personnel, customers, distributors, OEM’s and vendors who helped Petron achieve records in sales and operating income in 2011.
Petrochemical Prospects Provide Optimism in 2012
By Mike Bradford
In 2011, Penetone was able to close 6 new Pipeline Customers which generated over 120k in new sales revenue. With the approaching Pipeline Integrity Conference in February 2012, we are poised to launch the Penkleen Line of cleaning products which is a lower cost version of the Citrikleen Line and present our new Trade Show Booth with Animation graphics depicting our Pipeline Cleaning Process. The Animation will be shown on a 46 inch LCD Flat screen HDTV as part of the Booth backdrop.
We are sure to grab attention at the Conference with the anticipation of introducing the “Penetone Process” for Pipeline Cleaning. With the uptick in Oil and Gas production in the US, 2012 will certainly be a growth year in Pipeline sales for Penetone.
Additionally, we are happy to report that we continue to make significant progress in the Drilling Market. Although 2012 is an introduction year for Penetone in this area, we have landed one major customer, and have been able to present our capabilities to 2 other major players and several medium sized customers.
The potential in Drilling in the US is very significant and could prove to be the largest Market for Penetone sales in the next 5 years and beyond. With the early success and with continued good reception in the field, we will be able to achieve above plan sales in 2012.
Finally, Penetone landed a 3 year contract with an Alliance partner to supply Penetone 19 to the Oil Fields in the Middle East. The product is used to maintai power generation Turbines. The three year deal is worth an estimated 1.4 million in sales. The first year of the contract started in November of 2011.
Overall, we are very excited for what 2012 holds for Penetone. It’s an election year, which usually means an improvement in the economy is forthcoming, but there are no guarantees. Either way, 2012 should be a great year!
Time Flies and Sales Soar
By Jean Richard
How time flies! Another year over and we are well into 2012.
Overall, 2011 was quite positive. Sales were $12.2 Million (excluding DeLaval) 4.2% over plan. Industrial, supermarket and food segments exceeded plan with the barn market below plan due to continued culling of the herds. (Profitability remains very low for hog farmers in spite of some improvement in hog prices).
Operating profit was 10.4% over plan due to stringent cost controls and reformulating of some high-volume products. Two key segments of focus in 2012 will be:
- The oil & gas segment in Alberta (as long as crude prices remain in the $100/barrel this market continues to hold significant opportunities) and
- Food-processing plants in Eastern Quebec.
I would also like to take the opportunity thank all our personnel for their efforts and support thus ensuring West Canada’s continued success.
Bob Colombo Retires
By John McHale
Bob Colombo retired from Petron Corporation at the end of December after 18 years with the Company.
His first assignment was that of North American Sales Manager. Some years later he took on the responsibility of International Sales Manager and, in the last several years, Bob headed up our Technical Support Division.
During all of these assignments Bob travelled to numerous mining locations throughout the world selling and supporting Petron’s specialty lubricants. For those of you who truly understand the mining business, you know full well that many mining locations are located in tough to get to parts of the world and when you do get there many of the lodging and eating amenities are less than ideal. In spite of the travel hardships Bob was always willing to go wherever the job required. He has wonderful tales to tell you about many of the locations he has gone to, but the point is he travelled without complaint and he went often.
Bob’s strength lies in his technical expertise of lube systems, specialty lubricants, stationary and rotating machinery and overall mechanical aptitude. He is always the happiest when he is either trouble shooting a problem or presenting OGL’s to customers or OEM’s. Bob’s desire was to do less traveling but not quit the mining business completely. To that end, Bob has started up a consulting company and Petron is anticipating contracting with Bob to help us with OGL issues throughout the world. Only now Bob can be more choosey on where and when he goes. Bob and his wife, Rosalia, have recently completed building a new home in a beautiful location outside of Ouro Preto, Brazil.
We wish Bob well in his semi-retirement and we thank him for his 18 years of service to Petron.
2011 Employee Awards
Administrative – This year’s recipient is Darlene Vogel, Accounting Assistant , Petron. Darlene was recognized for her superior job performance (less than ½ percent error rate), and also for her willingness to take on additional work and assist other departments.
Salesman – Mac Popowich, West Penetone-Edmonton, takes this year’s award. Mac inherited additional work due to restructuring and not only did he absorb this work, but increased sales by 25% in his new territory. Mac’s sales were in the $1 million range for 2011.
Sales Manager – Petron’s Gerry Enroth gets recognition in this category as he continues to exceed expectations year in and year out. In 2011, sales in his area were 12% over plan and 23% over last year. In addition, Gerry takes on many marketing and administrative functions and has succeeded in growing sales in key strategic markets.
Operations – Eric Deslauriers, Shipping/Receiving Manager, West Penetone –Edmonton, is the 2011 recipient of this award. Eric has done an excellent job in reorganizing the department; significantly reducing errors and improving communications with the sales department. Congratulations to all recipients on their well-deserved awards.
President’s Award
Although a novice, joining the Company in November 2010, Ken Spearing, Chemist-Edmonton, has made his mark in record time and has been awarded the prestigious President’s Award for 2011. Ken single-handedly introduced a brand new line of “production chemistry” for drilling wells. Sales have gone from 0 to a budget of $1.5 million for 2012. This is a new opportunity for West Penetone and we expect significant growth in the upcoming years.
Service Milestones
Notable service achievements for the calendar quarter ending December 31, 2011 were attained by:
- 3 Years
Spencer Gorzalski - Petron Josee Mercure – West Penetone
- 5 Years
Quinton Lawson – Petron Greg Cebuliak – West Penetone Emerita Cacheiro – West Penetone
- 20 Years
Charles Good – Penetone Yvon Lapointe – West Penetone
- 25 Years
Kimberly Lyons - Penetone
New Hires
This past quarter West Penetone hired Yvon St Vry and Clark Evens Desmarattes, Production Workers and Alberto Medina,Controller
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