World Kinect Q3 Marine Profits Rise as Volumes Decline

World Kinect's marine profit margins are rising after a sharp drop in Q2. Image Credit: Ship & Bunker / Data Credit: World Kinect

Marine fuel profits at World Kinect -- the world's second-largest bunker supplier, also known as World Fuel Services -- advanced in the third quarter as sales volumes slipped.

The firm saw income from marine operations of $14.9 million in Q3, it said in an earnings release on Thursday. The figure was up by 20.2% on the year and by 43.3% from Q2.

Q2's marine profits were the lowest since the fourth quarter of 2021.

The company is the world's second-largest seller of marine fuels after Bunker Holding.

Gross profit from the marine segment was $37.2 million in Q3, up from $34.6 million a year earlier.

The firm sold 4 million mt of bunker fuel in Q3, down by 2.5% on the year and by 5% on the quarter.

That left a Q3 profit margin on its bunker sales of $3.77/mt, up from $3.06/mt a year earlier and from $2.50/mt in Q2. Since the start of 2015 the company's average marine profit margin has been $2.67/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

The firm remains satisfied with the performance of the marine side of its business, CEO Michael Kasbar said in a call with analysts on Thursday.

"Our marine business also operates on an efficient and highly scalable platform, delivering outsized financial results from small improvements in market conditions, while still creating value and contributing cash flow even in less favorable economic environments," Kasbar said.

"Marine continues to represent a valuable diversification component of our portfolio, a business with minimal working capital requirements and significant potential upside under the right conditions."

CFO Ira Birns highlighted strength in both bunker physical supply and trading.

"Gross profit increased approximately 7%, principally driven by strong performance in our core resale business activities, including year-over-year growth at several of our physical locations throughout the world," Birns said.

Little change is expected over the remainder of the year.

"As we look to the fourth quarter, we expect Marine growth profit to be effectively flat sequentially, but lower year-over-year, principally related to reduced market volatility and somewhat lower bunker fuel prices compared to the fourth quarter of 2023," Birns said.