World Kinect Sees Quarterly Recovery in Marine Profits and Volumes in Q4

Last year's declines follow a record 2022 performance amid geopolitical turmoil. Image Credit: Ship & Bunker / Data Credit: WFS

Marine fuel profits at World Kinect -- the world's second-largest bunker supplier, previously known as World Fuel Services -- advanced on a quarterly basis at the end of last year as delivered volumes jumped.

The firm saw income from marine operations of $19.3 million in the fourth quarter of 2023, down from $31.5 million a year earlier but up from $12.4 million in Q3, it said in a results statement on its website. The company is the world's second-largest seller of marine fuels after Bunker Holding.

Gross profit from the marine segment was $44 million in Q4, down from $56 million a year earlier and up from $34.6 million in Q3.

The firm sold 4.3 million mt of bunker fuel in Q4, down from 4.7 million mt a year earlier but up from 4.1 million mt in Q3.

That left a Q4 profit margin on its bunker sales of $4.51/mt, down from $6.73/mt a year earlier and up from $3.06/mt in Q3.

Taking 2023 as a whole, marine income sank by 47% to $82.3 million, marine gross profit dropped by 32.6% to $172.6 million, volumes dropped by 12% to 16.8 million mt and the marine gross margin fell by 40% to $4.87/mt.

World Kinect is the new name for the firm's overall holding company, but it still remains known as World Fuel Services in its market operations.

Analyst Call

"Marine came off a record year in 2022 when bunker prices and market volatility were considerably higher, but still performed very well in 2023," CEO Michael Kasbar said in a call with analysts on Thursday.

"As an example of the value of the World Kinect network, we are assisting a number of our clients with alternative fueling options in response to the recent disruption to trade in the Red Sea.

"This is similar to the COVID period where dislocations in normal transportation patterns meant our customers had to rely more on our expertise and global supply capabilities."

CFO Ira Birns also cited coming off a record performance in 2022 as a reason for 2023's decline.

"While marine gross profit declined year-over-year, the business performed very well considering the significantly lower price environment where similar to aviation, marine further improved capital efficiency, contributing to solid returns for the year," Birns said on the call.

"Looking to the first quarter, we are expecting marine to be flat to up slightly from the fourth quarter with margins holding steady, but expect a decline in profitability from the first quarter of 2023 when volatility levels still remained high."

No 'Earth-Shattering' Red Sea Diversion Profits

The firm is not expecting current diversions from the Red Sea -- entailing higher bunker consumption for longer voyages around Africa -- to return its marine division to 2022's record profits.

"I don't think that you're going to see anything earth-shattering," Kasbar said on the call.

"A lot of the planets need to be aligned; it's not one thing.

"You have a good amount of slow steaming going on.

"Certainly it's a perfect way for us to help the market and be able to create value in the marketplace and be able to participate in that value creation.

"We're not really expecting it's going to be seriously robust. But it's generally positive when there are certain types of dislocation that we can monetize by providing solutions."