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WFS marine segment gross profit jumps 24% on year for Q3 2019

01 Nov 2019

New York-listed oil and bunker trading firm World Fuel Services (WFS) on Wednesday (30 October) posted a 24.5% increase in net profit on year for the third quarter (Q3) of 2019 on the back of strong performance from its marine segment.

The company recorded net profit of USD 48.2 million in Q3 2019, compared to net profit of USD 38.7 million in Q3 2018.

Total revenue was USD 9.32 billion in Q3 2019, a 10.6% decrease from USD 10.43 billion in Q3 2018.

“Our Marine segment generated strongest results in nearly five years, driven by seasonality and a tight high sulphur fuel oil market in Singapore, which was generally the result of supply disruptions caused by the oilfield attacks in Saudi Arabia,” said Michael Kasbar, Chairman and CEO of WFS, in a recent earnings call.

“While these conditions seem to be moderating, the potential for market volatility and rising prices for low sulphur fuel oil, which will become the principal fuel used by the shipping industry come January, could provide similar profit opportunities as the IMO 2020 regulations go into effect.”

Specifically, revenue from the marine segment was USD 2.02 billion in Q3 2019, a 20% fall from revenue of USD 2.55 billion in Q3 2018. Gross profit for the similar segment was USD 53.4 million in Q3 2019, an increase from USD 43.0 million in Q3 2018.

WFS’ sales volume for the marine segment was 5.5 million mt in Q3 2019, compared to 6.0 million mt in Q3 2018.

“The Marine segment generated third quarter gross profit of $53 million. That's a $10 million, or 24% year-over-year increase, representing the highest of quarterly marine gross profit since the first quarter of 2015,” added Kasbar.

“The year-over-year increase was driven by continued strength in our core resale business as well as additional activity in Asia, principally resulting from the drone strikes in Saudi Arabia, which created significant disruptions in exports of high sulphur fuel oil to Singapore in the latter part of the third quarter.

“This resulted in supply shortages, which drove increased volumes and profitability to Asia during the quarter. It is possible that the timing of such disruption in advance of the upcoming IMO 2020 low sulphur regulations going into effect also contributed to the increase.”

Related: WFS Q2 profit increases by 29%, ‘extremely well prepared’ for IMO 2020
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RelatedWFS posts ‘solid start to the year’ with 37% increase in Q1 profit
RelatedWFS returns to profit for 2018 in ‘year of continuing transformation’
RelatedWFS records ‘better than expected performance’ in marine segment
RelatedWFS Q2 bunker sales volume 13% down on year
RelatedWFS posts Q1 net profit on increase in oil prices, offset by lower volume
RelatedWFS posts net loss of $142.0 million in 2017

Photo credit: World Fuel Services
Published: 1 November, 2019

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