World Fuel Services Bunker Sales Dip Again on Reduced Asia Activity

Bunker sales volume for WFS was 6.8 million mt. Image Credit: WFS

A decline in activity in Asia's bunker markets during 2Q 2017 for World Fuel Services Corporation (WFS) [NYSE:INT] lead to another dip in its marine fuel sales volumes, down to 6.8 million metric tonnes (mt) for the three months ended June 30, 2017 compared to the 8.2 million mt reported for the period last year, the company said Thursday in its 2Q 2017 earnings report.

"Volume in our marine segment for the second quarter was 6.8 million metric tonnes down approximately 1.5 million metric tonnes or 18 percent year-over-year. The largest driver of the volume reduction relates to our core operations principally in Asia," CFO Ira Birns explained during the firm's earnings call.

The quarterly bunker volume was flat sequentially, and the result follows an 11 percent drop year-over-year for bunker volumes in the previous quarter, with Birns explaining for 1Q 2017 that the volume decline "came from a reduction in low margin, low return activity in Asia."

For 2Q 2017 WFS' marine segment generated a gross profit of $33 million, a decrease of $6.7 million or 17 percent year-over-year.

"The gross profit decline was again principally driven by reduced volume in our core business primarily in Asia and a further decline in profits from the sale of price risk management products," said Birns.

"We do not anticipate a meaningful improvement in the macroeconomic or low fuel price environment any time soon therefore we are not expecting any material improvement in marine results over the balance of the year."

Increased weakness for marine meant volumes were also unlikely to recover through the rest of the year, he added.

Overall, WFS reported second quarter 2017 net income of $30.3 million, up slightly on the $29.8 million reported for the period last year.