In September the company announced plans to withdraw from the Hong Kong bunker market. File Image / Pixabay
Hong Kong-listed NewOcean Energy Holdings has issued a profit warning about its 2020 results after a slump in its earnings from the bunker market last year.
"Due to the global pandemic of COVID-19, the slump in global oil prices the Group's business operation has been seriously affected especially the oil bunkering business in Hong Kong and Singapore," the company said in an exchange filing this week.
"As a consequence, the gross profit margin derived from oil bunkering business and electronic business has been substantially reduced or turned into gross loss margin as compared to Year 2019."
The company also noted problems in recovering money from its customers.
"The Group has also experienced undue delay in trade receivables collection, inventory being sold under purchase costs and contracting of sales volume in different business units," NewOcean said.
"In certain cases, the buyers used various pretext (and in a particular case, also as a result of wrongful interference) to avoid their payment obligations and the Group had to resort to litigation to recover the amounts due and incurred substantial legal and other costs and expenses.
"The Group has been vigorously pursuing the trade debtors and any other party involved and expects to fully recover all overdue payment together with compensation for the Group's losses and damages."
The company expects to post a loss of about HK$2.37 billion for 2020, down from a net profit of HK$607 million the previous year.
In September the company announced plans to withdraw from the Hong Kong bunker market.