New York-listed World Fuel Services (WFS) expects its marine fuels business to produce better returns in the long term due to current reduction activities.
“As we look to the first quarter [of 2018] for marine, we expect gross profit to be relatively flat, but sequential marine result should improve driven principally by the benefit of additional cost reduction activities,” says Ira Birns, Executive Vice President and Chief Financial Officer of WFS, in a recent financial earnings conference call.
WFS’ marine segment generated fourth quarter gross profit of $29 million in 2017, down $6 million or 16% year-over-year; volume in the similar segment was 6.1 million metric tonnes, down approximately 1.5 million metric tons or 20% year-over-year.
“The largest drivers of the volume reduction relate to our operations in the Asia-Pac region and our decision to exit certain markets we have seen continued market pressure and weakness as well as our continuous efforts to reduce activity in regions where we have not been achieving satisfactory returns on capital,” Birns adds.
Michael Kasbar, Chairman and Chief Executive Officer of WFS, believes the company’s marine segment will produce better results in the longer term.
“Our right sized marine business should yield better returns and it's poised in the longer term to capitalise on the continuing need in the market for a comprehensive service and distribution partner,” he notes.
“We are well positioned to provide any solution for 2020 when low sulphur regulations commence.”
Moving ahead, Kasbar indicates that WFS may be exploring to enter the physical bunker supply business.
“I don't know if we have more of the markets to exist. We are being mindful of returns,” he said when responding to a query of marine volumes in the first quarter of 2018.
“So there has been some changes that is not a surprise to folks that have been following the marine business. So, we are looking as I said to model or physical business.”
Manifold Times earlier reported WFS posting net loss of $142 million in 2017 due to “challenging market conditions” in the marine and land segments.
Related: WFS posts net loss of $142.0 million in 2017
Published: 26 February, 2018
