World Fuel Services Posts Full Year 2016 Bunker Volumes of 31.4 Million MT

Tuesday February 14, 2017

World Fuel Services Corporation (WFS) [NYSE:INT] today, as part of its fourth quarter and full year 2016 earnings report, said its bunker sales volume for full year 2016 was 31.4 million metric tonnes (mt).

While this dipped slightly year-on-year compared to 2015's figure of 32.6 million mt, it was still substantially ahead of the 25.7 million mt recorded for the year ended December 31, 2014.

During WFS' earnings call, CEO Michael J. Kasbar noted continued weakness and "malaise" in both the shipping and energy markets, a situation that CFO Ira M. Birns said they expected to continue.

"The marine segment continues to experience overall weakness and an array of challenges throughout all sectors of the shipping industry. Low fuel prices and relatively low price availability, oversupply of shipping, weak economic activity led to another tumultuous year in 2016," said Kasbar.

"Given the current state of the industry, we believe the recovery will remain slow. However, we do believe we are positioned well to provide solutions to customers as fuel regulations evolve. Furthermore, we are poised with global initiatives when the market recovers."

WFS posted a gross profit for marine of $149.5 million for the year, down from $189.6 million in 2015, while income for the segment dropped substantially to $30.2 million, from $73.0 million in the pervious year.

Notable in the performance for marine was the fourth quarter income, a loss of $2.5 million, which WFS explained was due to a number of one off items including a write off of $6 million resulting from last year's collapse of Korean carrier Hanjin.

Excluding those item, marine segment income from operations for the fourth quarter was $7.3 million.

"As of December 31, 2016, we had outstanding receivables of approximately $7 million, net of anticipated insurance recoveries. We believe we will recover substantially all of the remaining Hanjin receivable," said Birns.

Overall, WFS reported full year 2016 net income of $126.5 million, or $146.9 million excluding the impact of certain one-time items.

"While 2016 was a challenging year in many of the markets we serve, we remain committed to executing on our short and long-term growth plans while increasing operational efficiency," he said.

"We are optimistic about our prospects for 2017 and are focused on executing on our long-term strategy of becoming a global leader in the areas of energy management, fulfillment, payments and transaction management."

WFS also noted it has embarked on a number of cost savings measures that had focused on "cutting the fat first," with Birns adding that marine's restructuring was now "95 percent complete."

"We don't expect a significant uptick in marine," he said, but it "will get the benefit of the restructuring activities.

"We remain committed to driving cost efficiencies in our business and we have identified $20 million of additional annualized cost savings across the business, which should help deliver a stronger result in 2017."