INTERVIEW: Monjasa Eyes Expansion After 2022's Record Profits
Knudsen was appointed CFO at Monjasa in January 2022. Image Credit: Monjasa
Global marine fuel supplier and trading firm Monjasa is considering how best to expand after seeing record volumes, revenues and profits last year.
The firm is on a secure financial footing with $171 million of profit in 2022, up by 677.3% on the year. Volumes climbed by 12.3% to 6.4 million mt.
The company has cemented its position as one of the world's leading marine fuels firms, retaining a prominent position in Ship & Bunker's 'Top Ten Bunker Suppliers' annual report.
The company attributes its record profitability in part to the market turmoil brought about by last year's geopolitical upheaval, Rasmus Knudsen, CFO at Monjasa, told Ship & Bunker in an interview on Tuesday.
There's some segments of the shipping markets performing better than others.
"It relates to the activities we had in the bunker market, where we saw unprecedented volatility on many, many parameters; oil prices fluctuating rapidly and more than we've seen before, and forward curves fluctuating more than we've seen before," Knudsen said.
"We saw disrupted supply chains, shifting trade flows and then we saw shipping markets generally speaking being very strong.
"There's some segments of the shipping markets performing better than others, but there was generally very strong performance amongst many of our customers, and that is also impacting us."
One factor behind the firm's gains may be the trend of bunker buyers switching purchases to the largest, most well-known marine fuels companies at times of uncertainty.
"We certainly see a tendency in the market when complexity increases, like we saw to a very high extent last year, that customers tend to choose suppliers that they feel comfortable with, and suppliers that can advise and further integrate with them also when costs go up," Knudsen said.
"When we look into our flows, we can see that this tendency is particularly prominent among the large customers."
A new office in Houston helped to drive a significant volumes increase in the Americas. Image Credit: Ship & Bunker / Data Credit: Monjasa
The firm's volumes broke down to 2.65 million mt in the Americas, 1.75 million mt in the Middle East and Africa, 1 million mt in Asia, 550,000 mt in Northwest Europe and 350,000 mt in the Mediterranean.
The Americas saw the strongest growth, at 35.8%, while the Middle East and Africa had the biggest decline at -10.3%.
One factor behind the strength in the Americas was the firm opening a new office in Houston in November 2021, as well as improvements in Panama, Knudsen said.
"One of the key factors, I would say is that we are getting even further into the value chain in for example, Panama where Monjasa has become a leading supplier," he said.
"We accelerated the physical operations in Houston too, and we spent quite a lot of focus on nurturing the possibilities in the area."
The company also launched a Brazilian operation in September 2022.
Prospects for 2023
Looking ahead to this year's performance, the company is anticipating $40-80 million in profits; a significant drop from last year's record haul, but still well above the $22 million seen in 2021.
It's a stabilisation or normalisation of the market.
"The factors impacting us to a very high extent last year, we see those stabilising, we see markets balancing, and we also see some pressure on the volumes," Knudsen said.
"That leaves us in a situation where we expect another healthy year, but not at the same level as we saw last year.
"It's a stabilisation or normalisation of the market."
But Knudsen declined to comment on what direction the firm's volumes might take this year. With a weakening of most shipping segments since 2022, most analysts expect the bunker market as a whole to see reduced volumes this year.
Improved Solvency Leaves Room for Expansion
Monjasa also saw an improvement in its solvency ratio last year, rising to to 46% in 2022 from 31% the previous year. This will be a key metric in allowing the company to expand, Knudsen said.
It shows how strong financially the company is, how strong the balance sheet is, in terms of facilitating future growth.
"The solvency ratio is the part of the balance sheet that is financed with equity," he said.
"It means a lot, because it shows how strong financially the company is, how strong the balance sheet is, in terms of facilitating future growth, be that opening up new supply locations or expanding the fleet.
"With a solvency ratio of that size, and with an equity at the $323 million that it ended at, that gives us possibilities to further invest in our logistical flow and facilities and enabling the future fuel mix."
No to Acquisitions
But any expansion is unlikely to include acquiring other firms.
"We plan to continue the organic growth that we have been through throughout the last several years," Knudsen said.
"We don't have any plans to start acquisitions, in terms of buying businesses, but we want to continue investing in our logistical set-up, investing in more vessels, and have the flexibility to continue following the industry.
"We've been here long enough to know that prices can go up and prices can go down, and if they go up quickly, that will also occupy some of the funds."
We don't aim towards growing just to grow; we aim towards evolving our business.
Preserving the company's culture is one reason for this, he argued.
"The reason that we don't expect to do it is that, for us it is very important to continue doing business the way we do," Knudsen said.
"It's important for us to build the future, the evolution of Monjasa, on the people and the culture that we already have.
"That's difficult if we start acquisitions, buying other trading companies or suppliers.
"Because we don't aim towards growing just to grow; we aim towards evolving our business.
"Fortunately we see increasing volumes, and we hope to continue seeing so, but that's not the game, per se, itself."
Buying bunker production facilities is also not immediately on the cards, though the company does not rule it out, Knudsen suggested.
"We look at all options, at all possibilities, but it's important for us that when we do so, it needs to be something where we can contribute with our position in the market between the customers and the suppliers and delivering the maritime logistics and trading that we do well," he said.
Building out Monjasa's presence in alternative fuels is one strategy the company is pursuing. In February the firm announced it had signed a commercial collaboration agreement with power-to-x project HØST PtX Esbjerg to provide green ammonia logistics services.
Monjasa will serve as maritime logistics partner, facilitating the supply of ammonia from the producer to its offtake partners. As part of the deal, the bunkering firm will have reserved for it a share of the plant's production that it can then sell as marine fuels.
"What we want to do now, is to utilise the position we have in the value chain, providing the maritime logistics and the trading, to enter into partnerships where those competencies and that business that we already operate can contribute to the full flow," Knudsen said.
"Whether or not to invest in assets, that's back to what I said before; we look at all options and possibilities, but the synergies are very important for us."