Petrol Ofisi, the traditional leader of the Turkish lubricant sector, started to receive the results of the strategy it has been following for a long time in 2022. Anticipating the changes experienced throughout the year, taking proactive measures and managing uncertainties nimbly, the company managed to maintain its market leadership while signing new investments and business partnerships.
We discussed the outcomes of the 2022 for the sector and the 2023 strategies of the company with Petrol Ofisi Lubricants Director Sezgin Gürsu. Gürsu, who made positive evaluations regarding 2023, is confident that Petrol Ofisi will strengthen its leadership in the lubricant market and grow with new investments and value-added products.
Lubricant World - Special News
How was the year 2022 in terms of the lubricant sector?
As the lubricant sector, we are experiencing an interesting period, which we call pandemic and “post pandemic”, especially in the last 2 – 3 years, and like all sectors, we are deeply feeling the effects of this adversity. Our sector continued to grow in 2022, although not as much as 2021. There are dynamics in this growth such as the increase in the number of vehicles and industrial production, and the absence of shutdowns in the pandemic. There are also dynamics that reduce consumption, such as the extension of vehicle and oil change kilometers and the transition to synthetic products in the industry. When we look at the total, we can estimate that lubricant consumption in Türkiye was growing by about 7-8% in 2022.
After the pandemic, disruption seen in the supply chain. The unexpected shortage in the supply of base oil last year was experienced in certain additives this year. There has been a global shortage, especially in additive materials consisting of metals such as zinc and aluminum. Also this year, fluctuations in base oil costs continued and were somewhat fueled, in particular, by the Russia – Ukraine conflict. While distributors, dealers, sub-dealers and retailers had to manage costs, the increase in exchange rates increased turnover and working capital. Working capital has risen and tripled, not only for us, but also for our dealers and retailers in between, along with exchange rates and base oil prices. For sure, that incrased even more with the inflation in Türkiye.
Therefore, as a business community, we had to manage risks on the one hand and financial costs on the other. As in every sector, durable and agile companies that adapt quickly to changing conditions and learn quickly, have been more successful. Apart from the general trends, we can summarize 2022 in the lubricant sector in the form of price fluctuations and supply chain problems, as well as working capital and financial cost increases.
How was the performance of Petrol Ofisi in terms of achieving goals in 2022?
At Petrol Ofisi Lubricants, we have an experienced and competent team, that is rarely seen. We have experienced many crisis together and solved them together for 10-12 years. In fact, as a team, we are getting the results of a strategy that has been going on for many years. We have put sustainable growth in the areas we target at the core of this strategy. At Petrol Ofisi, we are ready for tomorrow from today with value-added products, passenger car oils, new synthetic products. We already foresee and make preparations for our clients’ future needs and services that they will request. Of course, besides we endeavor for being a company that is efficient, flexible, easy-working, investing in people and close to the customer.
In line with this general strategy I have drawn, we continued to grow in 2022. In 2019, we had risen to the leadership in the lubricant market, excluding chemicals. For 3 years, we have been maintaining our leadership by widening the gap between our second competitor. This situation shows accuracy of our strategies. In 2022, we focused on supply chain beside this general strategy. We learned from the breaking of that chain in 2020 and made stock management much more carefully. We have kept our cooperation with our suppliers tight.
In 2022 the cost and price management were quite important. At one moment, with the Russian – Ukrainian war, there was a sudden surge in base oil prices. We had to make cost, pricing and margin management much more sensitive here. We informed our customers transparently and continued to grow by making price adjustments without losing customers. Therefore, 2022 was a succesful year for Petrol Ofisi Lubricants. It has been a year in which we anticipated changes quickly and took proactive measures, and continued our investments while maintaining our market leadership.
Sezgin Gürsu: “2022 was a succesful year for Petrol Ofisi Lubricants. It has been a year in which we anticipated changes quickly and took proactive measures, and continued our investments while maintaining our market leadership.”
Which investments and innovations did you implement in 2022?
We had made a decision to increase capacity in 2019 and in 2022 we took the first step of this great project. This is a 25 – 30 million dollar project that increases our current capacity from 140 thousand tons to 230 thousand tons. We are talking about an ambitious investment such as establishing a new lubricant factory out and out. We are becoming one of the few facilities worldwide by reaching a production capacity of 230 thousand tons with new storage areas, blending tanks and filling lines.
Another step we took this year was to switch to the SAP system from the Oracle in ERP. I am proud to say this because we did not experience any disruptions in the services we provide to our customers while making this transition. As 1st of January 2022, this transition that we have made has benefited us the most as Petrol Ofisi Lubricants. Because all of our production processes entered the ERP system and took us to an advanced point in terms of digitalization.
Petrol Ofisi Lubricants Director Sezgin Gürsu said that they have carried out 80% of their manager position appointments internally, thanks to the investment they have made in human resources.
Which segment did you focus on as Petrol Ofisi this year?
We focus on technology-intensive products with high added value. In the first place, of course, there were passenger car oils. Every vehicle manufacturer has now started to ask for their own approval, and in fact, perhaps this is the biggest change in the lubricant industry in the last 10 years. While our market share in this field was at the level of 10%, we managed to reach the level of 20% in 10 years. Our use of fuel synergy and our competent team have been very effective in this success. We have not neglected to introduce new products to the market, while continuing to grow in passenger car oils and all engine oils. Our new product series we have prepared for electric vehicles and CX 5W-30 oil, which has achieved a very serious market share, have taken its place in our product range with its new technology. We also continued to grow and gain share in synthetic products on the diesel side. On the industrial side, we continued to grow in predominantly synthetic and longer life grease products, synthetic compressor and hydraulic oils.
Petrol Ofisi and Chevron had decided to make the cooperation they started in 2015 in the field of marine oils much more comprehensive. The year 2022 was the first year of the cooperation between the two companies with the Texaco brand. Texaco quickly found a response in the market with the synergy it created, strengthening the both companies.
2022 was also quite dynamic in terms of the electric vehicle market. At Petrol Ofisi how do you evaluate these developments in this area?
Obviously, jokes like “The era of lubricants is over” have been made since electric vehicles came out, but when we look at the reports, we meet with a different picture. In 2030, between 20% and a maximum of 50% of newly sold passenger cars will be electric, and these new vehicles will remain in the existing vehicle pool at a much smaller rate. In heavy duty vehicles, internal combustion engines will continue, as well. Electric vehicles will affect 8% of lubricant needs in 2050.
Of course, this does not mean that we ignore the change and do not make any preparations. This is a reality and we support this change for the future of our planet. As a company, we prepare infrastructure for this and build our e-power charging stations. We have launched both our coolant, gear oil and grease for electric vehicles and have made our products ready for sale. As we have expressed in our slogan, at Petrol Ofisi, we are ready for tomorrow from today.
What other activities does Petrol Ofisi carry out on sustainability and what benefits does it provide to the environment?
We think that environmental awareness should be reflected in the practices of companies rather than words and slogans. Last year, we wrote our first sustainability report and that is when we realized how much we have actually done in this field. For example, we provide 5% fuel savings with our V/Max fuel with Active-3 technology. We were the first, who introduced low sulfur fuel oil when environmental regulations were not so strict in marine fuels. We are the first to introduce SAF (sustainable aviation fuel) in aviation fuels. We are one of the first companies to release the Hybrid 0W-20 and we save up to 4% on fuel just with this product.
I have just mentioned about e-power charging stations. Another agenda related to clean energy is the solar roof we have built for the warehouse within our factory investment. We will meet approximately 30% of the electricity need of the entire factory from here. At the same time, we installed the treatment system that separates rainwater and oily water in the factory last year and we renewed the purifiers. We are doing our best for our enivironment and working to leave a good legacy to future generations.
POTEM (Petrol Ofisi Technology Center) became the pride of the company with its works in 2022. POTEM, where the most authorized scientists of Türkiye work, directs the lubricant sector with the studies carried out in the laboratory and R&D center. The center, where 144 different experimental methods are applied, is influencing all over the world with its patent initiatives, technical articles and collaborations with OEMs.
Would you share your 2023 strategy as Petrol Ofisi Lubricants?
2023 is a year in which a number of uncertainities are expected however, both Türkiye and world are used to that. I can say that we all have muscled up to manage uncertainties. Türkiye's and the private sector's own dynamics have learned to turn their own wheel at their own speed. So much so that we are ending well a year that we started with a pessimistic approach and we have experienced unexpected growth for three years as an industry. In fact, our sector is an indicator of Turkish industry and trade, when considered together with the segments it is associated with. Therefore, we enter 2023 with positive expectations for both our industry and Türkiye.
As Petrol Ofisi Lubricants, we have put forward an optimistic picture in our 2023 budget. We will continue to produce with our speed of 2022. We consider that vehicle sales will continue at the same level. Apart from this, there may be fluctuations in costs, exchange rate movements but the critical thing is, that the demand continues. In other words, while we are increasing the capacity of our factory from 140 thousand tons to 230 thousand tons, we trust that the domestic demand in Türkiye will continue and we believe that the production wheel will turn. As our shareholders think the same way, they support this investment. On the other hand, we continue the same long-term strategy that I mentioned at the beginning. We will meet both the current and future needs of the market with our value-added products and strengthen our leadership position.
Sezgin Gürsu: We will continue to produce with our speed of 2022. We are confident that the domestic demand in Türkiye will continue and we believe that the production wheel will turn.
As Petrol Ofisi Lubricants do you have any export targets in 2023?
We have a slightly more aggressive growth target in exports. Currently, we export to totally 33 countries, mainly Iraq, Azerbaijan, Libya, Georgia and Northern Cyprus. The fairs we participated in last year had very important benefits both in the existing export markets and in our marine products sales. As much as possible, we will continue to attend fairs and evaluate export opportunities. We started to receive brand support for export by participating in the Turquality program in 2022. We already made our plan to use this plan efficiently. We will pull out all the stops to empower the Petrol Ofisi brand and expand our sphere of influence in new markets.
Let's talk a little about the support you provide to sports as a Petrol Ofisi?
Sure. Five years ago we made a sponsorship agreement with Altınordu F.K. Because we share the same philosophy with Altınordu. We, as Petrol Ofisi, born in Türkiye, we have invested in the future and development of our country and become the traditional leader of the sector. Altınordu is a soccer club that trains Turkish youth as both athletes and good people and does not recruit foreign players. Our cooperation has been going on for five years due to the compatibility of our philosophy. In 2022 we became the sponsor of both Galatasaray and Fenerbahce women soccer teams. We think that we gave really important message with this support. Our support is for both women soccer, therefore women athletes, and the friendship between two eternal rivals. Also recently, we have took on the sponsorship of the Physically Disabled Federation. We believe that it is important to make disabled people not feel alone and we feel proud of giving them support.
Celebrating the year of 2023 of the lubricants industry, Sezgin Gürsu congratulated the 40th issue of our magazine: “You have a very important mission in terms of representing the sector and providing technical information. I wish you continued success and express our support as the market leader.”
