The firm said it was hit by a 31 million rupee loss on forex denominated loans.
"The future appears to be challenging due to the emerging competition from within the country and the region," chairman Vijaya Malalasekera told shareholders in the annual report.
"Additionally, the slow demand from existing markets would curtail our export orders."
Chief executive Amila Jayasinghe said there was research and development spending on lubricants in 2012, which was expected to bring benefits in the future.
"With three new players entering the Graphite mining business in Sri Lanka, the year ahead looks to be very competitive," Jayasinghe said."We have increased training and exploration activities to make sure the new entrants do not compromise our strategic advantage.