Last year the company announced plans to withdraw from the Hong Kong bunker market. File Image / Pixabay
Hong Kong-listed NewOcean Energy has revealed plans for a scaled-down bunkering business, including potentially selling off parts of its barge fleet, after posting a loss for 2020.
The company confirmed it saw a loss of about HK$2.4 billion last year, down from a HK$607.1 million profit in 2019, in an annual report published on Wednesday. The firm had issued a profit warning earlier in the week, citing weakness in the bunker market.
NewOcean is now preparing for a much smaller role in the bunker market.
"Being all set for the significant scale-down of our oil products business, we are committed to focusing not only on the sales of products with high gross profits, but also on lowering our costs," the company said.
"When the costs of refuelling business in Hong Kong are relatively high, the Group will step up its efforts to sell wholesale to our clients who are distributors, and to lease its existing oil tankers to wholesalers or list them for sale.
"As to our business in Singapore, certain extent of its marine bunkering business will remain, with oil products of relatively stable gross profits and high sulphur fuel oil being the key focus of the business.
"Meanwhile, the Group will take the occupancy of a small portion of the total leased capacity of 300,000 tonnes of floating storage unit, while the remaining part will be leased to third parties for cost saving purposes."
The company said it had been forced to sell bunkers at a loss during the nadir of the COVID-19 pandemic last year.
"Due to the fact that our major competitors had turned to cut-throat tactics to sell oil products in large lots at low prices for cashing in during March and April, the Group reluctantly had to follow suit to sell products below costs for the depletion of stock in order to avoid more onerous impairment risks as a result of the ongoing oil price slump," the company said.
"As a result, March and April had recorded a substantial amount of negative gross profits in our marine bunkering business. "