WFS: Marine Profitability Up as Bunker Volumes Slip Again

Friday February 22, 2019

World Fuel Services (WFS) [NYSE:INT] has reported its full year bunker volumes fell again in 2018, but the profitability of the segment also continued its upward trend.

The bunker supplier sold 23.7 million metric tonnes (mt) last year, an 11% decline over the 2017 figure of 26.5 million mt, and a drop of some 25% vs the 31.4 million mt sold in 2016.

The reason for the decline was "principally related to the exit of certain low-margin businesses in the Asia Pacific region", EVP and CFO Ira M. Birns explained, which has been a consistent message over the last two years.

While volumes are down, gross profit in 2018 for the marine segment was $145.8 million, an increase of 16% year-over-year, and only slightly behind the gross profit of $149.5 million achieved with the significantly higher volumes of 2016.

"Looking ahead to the first quarter, we expect Marine results to again reflect significant year-over-year improvement," said Birns.

WFS last year also grew its footprint, announcing new operations in the Pacific Northwest and Florida's Tampa Bay Area, and Chairman and CEO, Michael J. Kasbar, said expansion was also on the cards for 2019.

"Sharpening the portfolio reduced the amount of working capital tied up in lower margin activities resulting in improved financial returns," he said.

"Looking forward, our Marine segment will continue to selectively expand its supply footprint and it is well positioned to assist customers in managing the supply challenges of fuel availability, quality, and compatibility that are expected to arise as we approach the implementation of the new IMO low-sulfur regulations that go into effect on January 1st, 2020."