SK Lubricants reported a 26% increase in operating profits in the fourth quarter of 2014 compared to the same period a year ago to KRW 71.4 billion (USD65.1 million).

Sales, which reached KRW 799 billion (USD729 million), rose for the fifth quarter out of six. This increase in sales is attributed to the start-up of a Group II heavy-grade production train at SK’s South Korea plant in June 2013, as well as the start-up of a 630,000 tonne-per-year Group III plant in Cartagena, Spain, part of a joint venture with Spain’s Repsol.

The Cartagena plant began operations in September 2014. Since it targets the European market, there have been fewer exports of base oils from South Korea to Europe in recent months.

SK Lubricants’ profit margins increased to 8.94%, from 7.63% during the same period a year ago. However, compared to the previous quarter, its profit margins in the fourth quarter were lower. In the third quarter of 2014, profit margins rose to 10.44%. The drop in profit margins reflected the 14% sales increase during the third quarter.

Lubricant margins have been steady as Group III base oil prices have not fallen as much as crude oil prices. Group III prices in Europe fell 7% in the fourth quarter from the third quarter. In contrast, Dubai crude fell 25% during the same period.

SK Lubricants is the lubricant unit of South Korea’s SK Innovation, and the world’s largest producer of Group III base oils.