Bunker Margins for World Kinect, Previously Known as World Fuel Services, Sink to Lowest Level Since 2021

Q2's marine margins were the lowest since the fourth quarter of 2021. Image Credit: Ship & Bunker / Data Credit: World Kinect

World Kinect, the US-listed fuel supplier previously known as World Fuel Services, saw its marine fuel income per tonne sink to the lowest level since 2021 in the second quarter as markets started to normalise following turmoil in 2022.

The firm saw income from marine operations of $19.8 million in the second quarter of this year, down from a record $52.7 million a year earlier and from $30.8 million in Q1, 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 $42 million in Q2, down from $78.2 million a year earlier and from $52 million in Q1.

The firm sold 4.2 million mt of bunker fuel in Q2, its lowest total since the second quarter of 2020. The figure was down from 4.9 million mt a year earlier and from 4.3 million mt in the previous quarter.

In a call with analysts last week, CFO Ira Birns cited 'declines in activity in the container market' as being behind the drop in volumes.

That left a profit margin on its Q2 bunker sales of $4.7/mt, down from $10.80/mt a year earlier and from $7.20/mt in Q1, and the least since the fourth quarter of 2021.

World Kinect saw significant growth from its bunker business last year as the war in Ukraine drove prices to record highs. The company saw its strongest margins in Q2, and they have since declined from these record levels but remain above historical averages.

Between the third quarter of 2014 and the second quarter of this year, the company saw an average income from marine operations of $2.53/mt.

"While year-over-year results were down as expected, marine margins remain well ahead of historical averages," Birns said on the call.

"As I mentioned during my aviation commentary, we also remain focused on ensuring we generate margins in marine, which enable us to maintain acceptable returns in the current interest rate environment.

"For the third quarter, while marine gross profits should be generally flat sequentially, gross profit will again be down year-over-year, similar to the year-over-year decline we experienced in the second quarter."