New York-listed oil and bunker trading firm World Fuel Services (WFS) on Thursday (30 July) said volumes across all of its operating segments were “negatively impacted” by the global shutdown due to the COVID-19 pandemic in its Q2 2020 results.
“The resilience of our diversified business model produced a respectable result for the quarter,” said Michael J. Kasbar, chairman and chief executive officer of WFS.
In Q1 2020, the company reported its marine segment generating the highest level of quarterly gross profit in more than five years.
However, it also expected “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.”
Despite volumes across the board in Q2 2020 generally being negatively impacted, the marine segment generated gross profit of USD37.2 million, an increase of 2% year-over-year, it said.
This is principally related to improved performance in the company’s core resale business, offset by significantly lower volume due to a decline in activity in connection with the pandemic.
The marine segment posted 4 million metric tonnes (mt) of bunker fuel sales in Q2 2020, a 21.5% decline compared to 5.1 MT sold in a similar quarter last year.
The reported highlights of the Q2 2020 results are:
“Our continued focus on cost and liquidity management further strengthened our balance sheet during this extraordinary time,” said Ira M. Birns, executive vice president and chief financial officer.
“We generated cash flows from operations of USD 236 million during the quarter and the expected proceeds from the announced sale of the Multi Service payment solutions business will provide additional capital to strategically invest in our core business portfolio.”
While the COVID-19 pandemic had a limited adverse effect on our results of operations and financial condition for the first quarter of 2020, the company said it has since seen a sharp decline in demand and related sales as large sectors of the global economy have been adversely impacted by the crisis.
WFS noted that it expects these negative impacts to continue through the third quarter as the recent increases in COVID-19 cases have further delayed the reopening of various economies around the world.
In addition to the actions it took during the first quarter in light of the unprecedented effects of the COVID-19 pandemic on the global economy, during the second quarter of 2020, WFS said it took additional steps and expanded the restructuring of its operations to include the rationalization of its global office footprint, including the transition of select offices to smaller or more cost-effective locations.
“While the ultimate duration and impact of the pandemic on our business and our customers’ operations remains unclear, we will continue to seek additional opportunities to further enhance our operating efficiencies and reduce costs throughout the current crisis and eventual recovery,” concluded WFS.
Photo credit: World Fuel Services
Published: 3 August, 2020
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