Fri 20 Mar 2015, 15:01 GMT

Aegean is 'done with capex', plans to shore up balance sheet and raise dividend


Bunker firm has no capex plans for the near future, and intends to use additional cash flow to fund working capital and increase the dividend.



Bunker firm Aegean Marine Petroleum Network Inc. has this week provided an insight into its strategy for 2015 and beyond during the company's quarterly earnings call on March 17.

Speaking during the call, E. Nikolas Tavlarios, president, explained that the company did not plan to sink a large amount of capital expenditure (capex) into future projects, and that any future expansion into new markets would be via "opportunistic expansions" similar to its recent acquisition of OW Bunker assets, which he said had been "aligned with our strategy to diversify our operations and expand our global footprint in a risk-averse manner".

Ben Nolan, director at brokerage and investment banking firm Stifel Nicolaus, asked Tavlarios: "Nick, sort of in your commentary there, you talked about looking to open new facilities. I guess - correct me if I am wrong, but my sense was that, it seemed like you guys are a little bit more - maybe the commentary was a little bit more focussed on growth opportunities than it has been in the past. First of all, is that correct, secondly, is that maybe a function of disruption of OW not being in the market, and that's sort of creating some disconnect and some opportunities to expand where maybe they didn't exist in the past?"

In reply to the question, Tavlarios said: "Look, it's a general matter. We analyze each and every location's performance on an ongoing basis, okay, and we also examine other markets that have an effect on us, to see if there are opportunities for us to do something better, more effective. And we have done this successfully and very methodically over the past, almost nine years now. We will continue to do that. We have certain things that we are looking at, at all times. I don't think if we could open a new location, we are going to go sit there and invest capex. No, this is going to be something greenfield that we do, much like when we bought on the new OW locations, right; we did not start putting invested capital in there. Those were done - again, we acquired those without having to put any capital to work or capex to work. We basically got them by signing contracts over. And I think if we were to do something new, it would be along that same line."

Peter Georgiopoulos, chairman, also added: "We are done with capex, and we don't see any capex in the near future."

Tavlarios later said that he expected earnings for 2015 to be higher than in 2014. Georgiopoulos explained that the reason for the income growth forecast was that the company expects to see more stable margins as it moves more towards blending in certain markets and "not just sort of buying retail, selling retail"; increased volumes from new markets (Los Angeles, U.S. Gulf, Germany and St. Petersburg); higher volumes in the U.S. East coast; revenue from the new storage facility in Fujairah; and a number of cost-cutting initiatives.

In terms of what the company plans to do with the expected additional cash flow, Georgiopoulos explained that the company intended to "just use it to shore up the balance sheet, to keep an amount of cash that we need to keep on the balance sheet to fund our working capital facilities. I think that's the first order of business with the free cash flow, its just keep an amount there that we need to satisfy our working capital facilities".

The Aegean chairman added: "After that, I mean look - I know it doesn't sound like a lot, we increased the dividend from a $0.01 to $0.02, but the 100 percent increase. So I think as we feel more comfortable that these initiatives are taking hold, that these new places that we have opened up are actually generating the kind of volumes we believe, that Fujairah is actually generating the kind of EBITDA we believe. Sure, then I believe that we will probably increase the dividend again at some point in the future."

On the issue of divestment, Georgiopoulos said: "We are just really looking at underperforming assets and saying, you know what, time to get rid of them."

When asked later if the company had any non-core assets that it was looking to sell in the short term, Georgiopoulos said: "There are a couple of older ships and a couple of other things, but nothing that we have announced yet and nothing that we are prepared to announce."


Hapag-Lloyd and DSV logo side by side. Hapag-Lloyd and DSV sign 18,000-tonne CO2e reduction agreement for sustainable marine fuels  

Two-year framework allows inclusion of alternative fuels beyond biofuels in shipping decarbonisation partnership.

Bangkok city skyline. Uni-Fuels opens Thailand office as part of Southeast Asia expansion  

Marine fuel supplier establishes Bangkok entity, appoints managing director with 15 years’ industry experience.

Washington State Hybrid-Electric 160-Auto Ferry vessel render. Corvus Energy to supply battery systems for Washington State Ferries hybrid vessels  

ABB selects Corvus for two new 160-vehicle ferries as part of $3.98bn electrification plan.

Vinssen and Mana Engineering sign MoU. Vinssen, Mana Engineering partner on hydrogen fuel cell retrofit for 800-teu feeder vessel  

South Korean and Dutch firms to pursue Lloyd’s Register approval for hybrid retrofit concept.

Hercules Elisabeth vessel. Hercules Tanker Management takes delivery of second Ultra-Spec vessel in China  

Hercules Elisabeth is the second of 10 hybrid-ready tankers designed for alternative fuels.

Wolf 1 vessel. Petrol Ofisi launches fuel supply tanker Wolf 1  

Turkish bunker supplier adds 1,750-dwt vessel with alternative fuel infrastructure to fleet.

BIMCO meeting. BIMCO to convene for adoption of biofuel clause and ETS provisions at February meeting  

Documentary Committee to consider new contractual frameworks for alternative fuels and emission trading scheme compliance.

Sea Change II vessel render. Incat Crowther and Switch Maritime develop 150-passenger hydrogen ferry for New York  

Design work begins on 28-metre vessel with 720 kg hydrogen capacity and 25-knot speed.

Aerial view of a container vessel. HIF Global signs heads of agreement with German eFuel One for 100,000 tonnes of e-methanol annually  

Deal covers supply from HIF’s Uruguay project, with e-methanol meeting EU RED III standards.

Welcoming of Kota Odyssey at Jordan’s Aqaba Container Terminal. PIL’s LNG-powered vessel makes maiden call at Jordan’s Aqaba port  

Kota Odyssey is Pacific International Lines’ first LNG-fuelled ship to call at the Red Sea port.