High fuel prices have increased World Fuel Services’ marine business profit margin in Q1.
Increasing oil prices and a strained credit environment have been a massive advantage for World Fuel Services in the year’s first three months, resulting in tripled earnings from the bunker firm’s sale of ship fuels.
This is evident from the quarterly report presented by World Fuel Services, which, according to analyst firm Seacred, is the world’s second-largest bunker supplier after Denmark-based Bunker Holding.
[It is] related to the impact of the rise in global oil prices and the resulting constrained credit environment
World Fuel Services
”Our marine segment generated gross profit of USD 47m, an increase of 85% year-over-year, principally related to the impact of the rise in global oil prices and the resulting constrained credit environment,” reads the statement.
When oil and bunker fuel prices soar, it prompts an increased need for liquidity among bunker suppliers when they have to provide credit for customers, and this can be a challenge for smaller players among bunker suppliers.
Higher earnings margin
But it’s not only gross earnings which have increased throughout the first quarter compared to the same quarter the previous year, according to the financial figures.
In Q1, the operating result from the marine business has nearly tripled in comparison to the same quarter in 2021, landing at USD 23.1m against USD 6.4m the year before.
Among contributing factors is an increased earnings margin on the sold amounts of bunker fuel.
World Fuel Services performed a profit margin of 49.2% on the 4.7 million tonnes of bunker fuel sold by the company in Q1.
In the same quarter last year, the profit margin was only half, namely 25.2% from a sale of 4.2 million tonnes of bunker fuel, according to an investor presentation.
First quarter’s gross profit came to USD 231m against USD 192m in Q1 the previous year. The bottom line revealed a plus of USD 26.3m compared to USD 18.8m in the same quarter the year before.
The bunker firm’s quarterly report is affected by a decline in the gross profit from sales to the aviation industry of 16% to USD 64m compared to the same period last year, among other factors due to loss of inventory, ”market dynamics” and a reduction of the company’s ”government-related activity in Afghanistan” following the withdrawal of US military from the country.
