Bunker Holding Reports "Substantially" Increased Market Share, Growing Bunker Volumes, but Tough Conditions Hit Profits

Keld R. Demant, CEO, Bunker Holding. Image Credit: Bunker Holding

Bunker Holding today reported growing bunker volumes and a "substantially" increased market share during its 2016/17 financial year, but tough market conditions and increased competition took a significant toll on profits.

Profit before tax was reported to be DKK236 million ($43.7 million), down 40.7 percent from the DKK398 million ($60.8 million) reported last year, while post tax profit fell to DKK186 million ($28.4 million) from DKK316 million ($48.3 million) reported in 2015/16.

Headcount across Bunker Holding dipped to 630 from 653 in the previous period.

However, given the underlying market conditions surrounding the result, which Bunker Holding said included intensified competition that was aggravated by the fact that low oil prices had allowed several smaller operators access to larger product quantities than they would have otherwise gained given their financial position, CEO Keld R. Demant said he was proud of the result.

"The combination of low global growth and weak demand in the shipping industry made 2016/17 a rather trying financial year. So, in the light of the headwind encountered by the entire industry, we can only be proud of our results and the fine efforts made by our many loyal employees," said Demant, in comments that came as part of United Shipping & Trading Company (USTC) and ultimate parent company Selfinvest's year end financial statements.

"We succeeded in substantially increasing our market share and in significantly consolidating our strategic foundation. At the same time, we have the requisite size and capital to exploit the positive trend in the industry we are faintly seeing once again."

Competitors Scale Back

It was also noted that "several of Bunker Holding's competitors" had also been impacted by market pressures, "forcing them to scale back over the year."

"By contrast, Bunker Holding invested heavily in the supplementary training of its employees, opened new offices and increased the number of physical operations around the world. The higher volume (number of tonnes handled) is one result of increased transactions from its own physical oil stocks, which is one of Bunker Holding's newest business areas," the company said.

Specific data on bunker volumes was not provided.

Overall, USTC parent Selfinvest generated a profit before tax of DKK264 million ($40.3 million), compared to DKK480 million ($73.4 million) for 2015/16.

"Obviously, we're not pleased with having to accept lower profits. But considering the challenging market conditions, and in the light of our competitors' results, we've made it through 2016/17 in a reasonable manner," said Selfinvest CEO Torben Østergaard-Nielsen.

"Without getting overly analytical, I'm not afraid to say that the industry is in stormy waters like never before. Safely navigating this situation requires us to maintain keen focus and constantly seek the opportunities that, in spite of everything, are still there in the market."

Indeed, despite the expectation of continued tough conditions, Bunker Holding sees an improved performance for the year ahead.

"The second half of the recently completed financial year was significantly better than the first six months. We optimised our business and benefited from the upward oil-price trends," said Demant.

"For 2017/18, we are therefore expecting a better financial result where we can truly benefit from our capital structure, our vast and well- trained workforce, our size and our unique worldwide experience." 

* 1 USD = 6.54477 DKK