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WFS marine segment posts highest level of quarterly gross profit in more than five years

04 May 2020

New York-listed oil and bunker trading firm World Fuel Services (WFS) on Thursday (30 May) posted a 15.6% increase in net profit, with its marine segment generating the highest level of quarterly gross profit in more than five years.

The company recorded net profit of USD 30.4 million in the first quarter of 2020 (Q1 2020), an increase from net profit of USD 26.3 million during Q1 2019.

“Our marine segment generated gross profit of $59.3 million, an increase of 68% year-over-year, primarily related to stronger performance resulting from heightened market volatility and higher prices related to the impact of the implementation of low sulphur regulations at the beginning of 2020,” said Michael Kasbar Chairman and CEO.

Ira Birns, EVP and CFO, explained revenues for the marine segment increased year-over-year principally because of the significant shift to higher price, low-sulphur fuel oil in the first quarter.

“Volume in our Marine segment for the first quarter was 4.9 million metric tons down 300,000 metric tons or 6% year-over-year,” he said.

“Sequentially Marine volume was only down 4% despite the negative impact from the pandemic in certain parts of the Marine business in the latter part of the quarter.

“While to-date we have not experienced the same level of decline in our Marine business as we have in Aviation, we still expect a more meaningful decline in volume in the second quarter due to the continuing effects of the crisis.”

Moving forward, Birns forecasts the company’s marine fuels trading business to be affected by the coronavirus situation.

“As we look to the second quarter, we expect Marine gross profit to be more meaningfully impacted by both the coronavirus situation as well as substantially lower fuel prices, particularly low-sulphur fuel oil,” he notes.

“We expect this will result in a significant sequential decline in gross profit but we still expect second quarter results to be generally in line with the second quarter of 2019.”

Reports of WFS previous year financial performance are as follows:

Related: WFS marine sales volume approximately 12% down in FY 2019
Related: WFS marine segment gross profit jumps 24% on year for Q3 2019
Related: WFS Q2 profit increases by 29%, ‘extremely well prepared’ for IMO 2020
Related: WFS expands unsecured credit facility to $1.8 billion ahead of IMO 2020
Related: WFS posts ‘solid start to the year’ with 37% increase in Q1 profit

Photo credit: World Fuel Services
Published: 5 May, 2020

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