Aegean Posts Q3 Loss of $3.8 Million as Marine Fuel Sector Remains "Under Great Pressure with Intense Competition"

Aegean President Jonathan Mcilroy. Image Credit: Aegean

Aegean Marine Petroleum Network Inc. [NYSE: ANW] (Aegean) today reported a net loss of $3.8 million for the third quarter of 2017, a decrease of $21.5 million or 121.5% compared to the same period in 2016, saying the marine fuel sector remains "under great pressure with intense competition."

The result is in-line with expectations set last week when the bunker supplier warned it was expecting a loss of between $3.4 and $4.4 million.

Bunker sales volumes for the period also dipped, falling 2.8% year-on-year to 4,139,624 metric tonnes (mt) from 4,258,954 mt sold in the period for 2016.

The volume was also down 7.5% sequentially, with Spyros Gianniotis, Aegean's Chief Financial Officer, saying the decrease in sales volume when compared to the prior quarter was "mainly as the result of our reduced presence in Singapore and Fujairah and weather conditions in other areas."

As Ship & Bunker previously reported, Aegean said last month it will exit the Singapore bunker market as a physical supplier effective January 2018.

Revenue for the third quarter of 2017 was $1,344.1 million, an increase of 18.0% compared to the same period in 2016, which Aegean said was primarily due to the increase in oil prices.

Aegean reports that as of September 30, 2017, it had cash and cash equivalents of $74.8 million and working capital of $360.2 million.

"We experienced an extremely challenging market environment during the third quarter of 2017. Despite modest improvement in some segments of the shipping industry, the oil markets and the marine fuel sector remain under great pressure with intense competition leading to further margin deterioration," said Aegean President Jonathan McIlroy.

"This situation was compounded by extraordinary events. Adverse weather, which included three hurricanes, as well as a refinery fire all significantly affected procurement costs as well as sales volumes in some regions. Despite the material progress we have made in cost reduction and asset rationalization, we recorded a net loss of $3.8 million for the third quarter."

On a more positive note for the period, Aegean said it has now achieved annualized cost savings of $24 million, exceeding its previously stated goal of realizing annualized cost savings of $20 million, and has now upped this target to $30 million.

The supplier also says it still expects to add at least one more new market presence in the first half of 2018.

"We believe that as we continue to rationalize our global business in this competitive market, our balance sheet strength and geographic mix will differentiate Aegean from competitors that do not have the benefit of our broad network and solid capitalization," said Gianniotis.

Aegean will discuss the results in an Earnings Conference Call set for tomorrow at 8:30 AM EST.