World Fuel Services stand at SIBCON 2018. Image Credit: Ship & Bunker
World Fuel Services Corporation (WFS) [NYSE:INT] today reported the completion of another solid quarter for its marine business in keeping with its strategy of lower volumes and higher profits.
"Our marine segment generated gross profit of $36.4 million, an increase of 20% year-over-year, principally related to improved performance in our core resale operations," said Michael J. Kasbar, WFS' chairman and CEO.
Over the last two years the supplier has looked to boost the profitability of its marine business in particular by cutting back on its "low margin, low return" activity in Asia.
Q2 2019 was no different, with overall volumes for the period dipping to 5.1 million metric tonnes (mt).
This compares with sales volumes of 5.9 million mt last year, 6.8 million mt in 2017, and 8.2 million mt for the period in 2016.
Overall, the company reported a total gross profit of $268.6 million, up 9% year-over-year, and a net income of $39 million.
The firm's strategy has clearly been a hit with investors; WFS has seen its share price rise some 85% since dipping to a 52-week low of just under $20 at the end of December.
This week WFS said it has also increased its unsecured credit facility to $1.8 billion, something that will not doubt be a help for its marine unit given the upcoming 0.50% sulfur cap on marine fuel from January 1, 2020.
"We maintain a cautiously optimistic view regarding the opportunity represented by the compliance challenges facing our customers with the adoption of the IMO 2020 sulfur gas standards," said Kasbar.
"Our substantial financial capability, technical capacity, and extensive cross-segment supply and logistics capabilities position us exceptionally well to address our customers' requirements leading up to and in the wake of the new regulatory environment."