Petron Corporation 2011 Review

Petron Corporation 2011 Review

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 pick up 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.

Sincerely,

John P. McHale

Executive VP/General Manager