Thu 11 Nov 2010, 06:14 GMT

Aegean reports 67% drop in Q3 earnings


Net income falls despite 82% rise in revenue as the cost of marine petroleum products sold nearly doubles.



Aegean Marine Petroleum Network Inc. has announced that net income for the third quarter of 2010 fell by $9.5 million, or 67 percent, year-on-year. The lower-than-expected earnings were achieved despite an 82 percent rise in revenue as the cost of marine petroleum products sold jumped 87 percent to $1.275 billion.

The New York-listed bunker supplier posted a net income of $4.6 million, or $0.10 per share, compared with $14.1 million, or $0.33 per share, during the corresponding period in 2009.

Net income adjusted for one-time expenses, including $1.2 million in restructuring charges for the company's Vancouver operations as well as $1.9 million in unrealized foreign exchange losses related to Aegean Marine's Verbeke Bunkering subsidiary, was $7.7 million, or $0.16 per share.

Total revenues for the third quarter increased by 82 percent to $1,340.0 million compared to $736.1 million for the same period in 2009. Sales of marine petroleum products increased by 82.2 percent to $1,333.4 million compared to $731.8 million for the year-earlier period.

Net revenue, which equals total revenue less cost of goods sold and cargo transportation expenses, increased by 15.9 percent to $60.5 million compared to $52.2 million during the same 3-month period in 2009.

The cost of marine petroleum products sold rose by $592.9 million, or 87 percent, to 1,275 million, up from 682 million during the third quarter of 2009.

The volume of marine fuel sold increased by 75.6 percent to 2,871,711 metric tonnes compared to 1,635,473 metric tonnes in the year-earlier period, as sales volumes increased across major markets.

Operating income for the third quarter decreased by $7.4 million, or 43 percent, to $9.8 million compared to $17.2 million the previous year.

Operating expenses, excluding the cost of fuel and cargo transportation costs, increased by $15.7 million, or 45 percent, to $50.7 million for the three months ended September 30, 2010, up from $35.0 million in 2009.

Commenting on the results, E. Nikolas Tavlarios, President commented, "During the third quarter, Aegean Marine increased sales volumes by more than 75% compared to the year-earlier period. However our results for the quarter reflect a change in the competitive landscape across our geographical portfolio, particularly in our two largest markets, which adversely affected gross spread. The industry experienced an increase in the supply of marine fuel together with a change in buying patterns by shipowners, who used increased downtime to fill their marine fuel requirements through smaller purchases in a higher number of ports. Additionally, our performance for the quarter was impacted by one-time restructuring charges for our Vancouver market as well as unrealized foreign exchange loss related to our Verbeke Bunkering subsidiary."

Mr. Tavlarios added, "With a comprehensive marine fuel solution from procurement to delivery, combined with considerable access to capital, Aegean Marine's future prospects remain strong. Our unique business model creates attractive leverage opportunities and we expect to increase our long-term earning potential as we continue to expand our global full-service platform and meet the strong demand for our vertically integrated services."

First Nine Months

For the first nine months of 2010, Aegean posted a $4.1 million, or 11.8 percent, drop in net income to $30.7 million, or $0.66 per share, compared to a net income of $34.8 million, or $0.82 per share, for the year-earlier period.

Total revenues for period increased by $1,875.8 million, or 114 percent, to $3,519.9 million compared to $1,644.1 million in 2009. Sales of marine petroleum products rose to $3,505.0 million compared to $1,631.0 million last year.

Net revenue increased 32.0 percent, or $44.6 million, to $184.0 million in the first nine months of this year, compared to $139.4 million in 2009.

The volume of marine fuel sold increased by 66.9 percent to 7,417,270 metric tonnes compared to 4,444,447 metric tonnes during the corresponding period last year.

Operating income for the nine months ended September 30, 2010 rose to $46.4 million, up from $43.1 million in 2009.


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