INTERVIEW: Bunker Holding Makes Progress in Acquisition Plans

Keld Demant is CEO of Bunker Holding. Image Credit: Bunker Holding

Global marine fuels group Bunker Holding is looking at the possibility of completing its first large-scale acquisition since OceanConnect Marine by the end of this year despite what it sees as a heavily uncertain outlook for bunkering.

The firm made an offer on a rival bunker company earlier this year, has been presented with a counter-offer and is now considering it, CEO Keld Demant said in an interview with Ship & Bunker.

The potential acquisition case is described as of a firm not in the top ten in the world, but perhaps the top 20. Bunker Holding is the world's largest marine fuels firm by sales volumes.

"It's in an area both geographically and a segment which is really interesting for us," Demant said.

"And if we can close the gap, then we can start the due diligence, and then we can definitely do the closing within the calendar year of 2025.

"But there's still a way to go to close the gap, so let's see how this turns out."

In 2020 Bunker Holding subsidiary KPI Bridge Oil merged with OceanConnect Marine, with the two brands being brought together as KPI OceanConnect. The firm also acquired brokerage LQM in 2015.

More recently but on a smaller scale, Bunker Holding parent company USTC acquired digital brokerage BunkerEx in March 2021. The firm has recently been rebranded as Maritime IntelX.

Profit Decline

Bunker Holding has seen significant challenges in its financial performance over the past two years.

Aside from significant write-downs - $125 million in 2023/24 and $36 million in 2024/25 - related to the closure of onshore cargo trading unit PSTV Cargo, which it considers as one-offs unrelated to ongoing business, the company has also seen a sharp drop in operating profit from the abnormally high levels seen in the previous few years.

Image Credit: Ship & Bunker

In 2024/25 the company saw pre-tax profit from continuing operations of $46 million, it said last week, down by 63.8% from a year earlier and the least since 2017/18.

A combination of increased competition, falling demand and more sophisticated buying strategies from shipping firms have combined to deliver lower profits, Demant said.

"On the continuing business, we have seen a pressure on margins," he said.

"We have seen better planning from people buying.

"We have seen less demand for credit and the imbalance of too much offering and too low demand, putting pressure on margins.

"In a way, we see it as quite a natural step, and if you look industry-wide, I think we can say that everybody in the industry has suffered from this within the past year."

The firm's volumes have held up, standing at about 25 million mt in calendar 2024. But relatively low volatility in crack spreads - despite high volatility in underlying crude prices - has limited profitability.

If the write-downs were treated as ordinary trading losses and subtracted from operating profits for the past two financial years, the firm would have recorded pre-tax profits of about $2 million in 2023/24 and $10 million in 2024/25, far lower than historical levels even seen before the strong performance at the start of the 2020s.

But the company is adamant that these write-downs are anomalies in its books unrelated to ongoing business, and that it can move past them.

"The people who handled this - they are not with us any more - didn't have full control of this, so it is unexpected additional costs, and we've taken them over the course of the year and then closed that chapter out," Demant said.

Reorganisation

Bunker Holding is in the process of reinventing core parts of itself in response to increased complexity in the market.

The firm announced a restructuring of its legal structures in May, and had gone through a management shake-up in November 2024.

Its latest change, announced last week, was the hiring of Mikkel Kannegaard from DHL Global Forwarding to head up its new global supply organisation.

Kannegaard's new role will be to run 'a consolidated global team covering physical operations, regional sourcing centers, technical support and our green transition efforts', Bunker Holding said at the time.

Demant explained the new role as a means of optimising customer service by taking a comprehensive view of the marine fuel value chain.

"When you as a company grow, you grow normally, department-wise; we all know that any companies have a tendency to create working silos," he said.

"What we want with this new position is to make absolutely sure that our offering is the best at any given time, meaning all the tools we have by handling the largest volume of any company, by having physical set-up, by having our own risk management, having our own set-up on the EU-ETS and so on.

"We want someone who understands the entire value chain and makes sure that we put together the best offering for each individual customer we have."

Crystal Ball Outage

While Bunker Holding is confident enough in the longer-term future of marine fuels to be considering an acquisition, the firm is seeing unprecedented levels in uncertainty over the future outlook in the near term.

"The visibility is very, very bad," Demant said.

"To look in the crystal ball now is the hardest of any of my 27 years in the industry, and I simply do not dare to predict about the coming period.

"We are off to a reasonable start, but what the next 10 months will bring, I simply do not know.

"Normally I can predict, but this year I will stay away from it."