Tue 18 May 2010, 08:22 GMT

Andatee announces Q1 2010 results


Slight decline in net income despite rise in first quarter revenues and gross profit



Andatee China Marine Fuel Services Corporation, the leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China, has announced that net income during the first quarter of 2010 declined to $1.4 million from $1.5 million during the corresponding period last year.

Revenues for the first quarter 2010 were $29.8 million, or 18.0 percent higher than the $25.2 million achieved during the same period in 2009. This increase was attributable to the increase in retail sales due to the expansion of the company's sales network and higher international crude oil price.

Total sales volumes for the first quarter were down 14 percent to 47,000 tonnes compared with 55,000 tons in 2009. This was said to be primarily attributable to the decrease in sales due to cold weather conditions in ports that represent a substantial portion of the company's sales.

Sales of #4 marine fuel, mainly used by fishing boats, represented 66.5 percent of Andatee's total sales; volumes of #3 made up 10 percent of sales and #2 marine fuel represented 10.2 percent of total sales. Meanwhile, sales of 180-cst and 120-cst were 6.9% and 6.3% of sales, respectively.

The company's gross profit increased by 19.3 percent to $3.6 million from $3.0 million in first quarter of 2009. The gross profit margin was 12.0 percent for the first quarter of 2010, compared with the 11.9 percent achieved in the year-earlier period. The increase in gross profit margin was said to be primarily due to an increase in sales of higher margin products to retail customers.

Sales to retail customers increased from 36 percent of total sales in the first quarter of 2009 to 44 percent in first quarter of 2010 as the result of Andatee's expansion and the acquisition of retail distribution facilities.

Selling, general and administrative expenses were approximately $1.4 million during the first three months of this year, compared with $1.0 million in 2009. The increase was primarily due to increased expenses related to maintaining the company's status as a public company in the United States.

As a result, income from operations in the first quarter of 2010 was $2.2 million, representing an 11.7 percent increase from the $2.0 million earnt last year. The company's operating margin was down to 7.4 percent in the first quarter of 2010 from 7.9 percent the previous year.

Commenting on the results, Fengbin An, Chairman and CEO of Andatee China Marine Fuel Services Corporation, said: "We are pleased to deliver another quarter of solid financial results despite the impact from a longer winter season, which resulted in a decrease in sales volume during the first quarter of 2010. Nonetheless, we were able to maintain healthy growth and favorable gross margins, as our strategy to focus our sales into the less price sensitive retail market has proven successful.

"As we prepare for the busy quarters ahead, we remain confident with the outlook for our business in 2010, as our customers continue to show increasing demand for our blended marine fuel products," added Mr. An.

Financial Condition

Following the completion of its January 2010 IPO, as of March 31, 2010 Andatee had $21.2 million in cash and cash equivalents, and approximately $25.4 million in working capital, compared to $3.9 million for the quarter ended December 31, 2009. Stockholders' equity as of March 31, 2010 was $40.0 million, an increase of 127.3 percent over the $17.6 million recorded as of December 31, 2009.

Business Outlook

As the leading supplier in the highly fragmented small- and medium-sized fishing vessel market, Andatee said it is well positioned to take advantage of the expected growth in demand for marine fuel in China.

The company intends to leverage the quality of its products as well as its brand recognition to continue to expand its geographic footprint by building or acquiring new facilities. The company anticipates an increase in demand for its marine fuel products as it addresses the quality and pricing volatility issues faced by the local fishing and cargo operators, and expects to continue to focus on retail sales customers in order to maintain strong margins.

"Given our strong balance sheet position, we will continue our effort to expand to more facilities closer to end markets, through business acquisitions, partner cooperation and building local platforms for our products," concluded Mr. An.

China 

Peninsula 2026 graduate cohort. Peninsula welcomes 2026 graduate cohort across global bunkering network  

Bunker firm brings new graduates into roles spanning Houston, Singapore, Gibraltar, Monaco and Las Palmas.

Mathias Krogsgard, Malik Supply. Malik Supply appoints Mathias KrogsgÃ¥rd as bunker trader  

Danish bunker firm adds trader with export and technology background to growing team.

Jeroen De Vos, Peninsula. Biofuel adoption in shipping shifts from debate to delivery, says Peninsula's Jeroen de Vos  

Marine biofuels have moved from pilot projects to routine fuel strategy, argues IBIA vice-chair.

KEPCO E&C and KR signing. KEPCO E&C and Korean Register of Shipping to collaborate on marine SMR development  

Korean firms to develop technical standards and certification pathways for the BANDI offshore small modular reactor.

Ship-to-ship (STS) LNG bunkering operation at the Port of Sagunto. Peninsula completes first LNG bunkering operation at Sagunto  

Levante LNG bunkering vessel supplies K Line car carrier in landmark delivery.

Person signing a document. India and EU sign letter of intent for green shipping corridor coalition  

India's Ministry of Ports, Shipping and Waterways and EU partners have agreed to develop green ammonia and methanol trade links.

CMA CGM Gold naming ceremony. CMA CGM takes delivery of methanol dual-fuel newbuild  

13,000-TEU CMA CGM Gold uses conventional fuels as well as alternative fuels, including biomethanol and e-methanol.

Mass flow meter (MFM) system installation on Storholmen vessel. TFG Marine meets 2026 target to equip 90% of bunkering fleet with mass flow meters  

Installation aboard the Storholmen takes MFM deployment across its global fleet to more than 90%.

World Fuel logo. World Fuel seeks marine fuel sales executive in Singapore  

Role requires more than five years' experience in bunkering, trading, energy or commodities.

Th'ailib vessel. MISC names first of three new LNG carriers for QatarEnergy charter deal  

Th'ailib, chartered to QatarEnergy for 15 years, extends MISC's long-term LNG fleet partnership with the energy producer.