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| Aegean posts net loss and 23.2% drop in gross profit |
| Bunker firm cites 'challenging' environment as sales margin plummets.
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Updated on 16 Aug 2017 08:01 GMT
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Aegean Marine Petroleum Network Inc. reports that it posted a net loss of $3.775 million in the third quarter (Q3) of 2017 compared to a net profit of $10.551 million during the corresponding period in 2016.
For the first nine months of the year, the net loss was $698,000, having achieved a net profit of $35.846 million last year.
Gross profit in Q3 declined by $20.555 million, or 23.2 percent, to $67.885 million. Nine-month gross profit fell $32.223 million, or 12.3 percent, to $230.464 million.
The net loss and decline in gross profit was seen despite Q3 revenue increasing by $204.569 million, or 18.0 percent, to $1,344 million. For the January-September period, revenue was $4,309 million - a YoY rise of $1,429 million, or 49.6 percent.
Sales volume in Q3 was down YoY by 119,330 metric tonnes, or 2.8 percent, to 4,139,624 tonnes. In a sequential comparison with the previous quarter, the figure was lower by 334,870 tonnes, or 7.5 percent.
Aegean said the gross spread per metric tonne of marine fuel sold - the margin the company generates on sales of marine fuel - plummeted to $14.6, down from last year's figure of $18.6. For the first three quarters of 2017, the margin was $15.9 compared to $19.0 a year ago.
Commenting on the results, Jonathan Mcilroy, Aegean's president, said: "We experienced an extremely challenging market environment during the third quarter of 2017. Despite modest improvement in some segments of the shipping industry, the oil markets and the marine fuel sector remain under great pressure with intense competition leading to further margin deterioration. This situation was compounded by extraordinary events. Adverse weather, which included three hurricanes, as well as a refinery fire all significantly affected procurement costs as well as sales volumes in some regions. Despite the material progress we have made in cost reduction and asset rationalization, we recorded a net loss of $3.8 million for the third quarter.
"During the quarter, we implemented strategic initiatives which will help reposition Aegean's business for the long term. We withdrew from the loss-generating physical supply business in the Singapore market. However, given the size of the market we will continue to maintain a trading presence to serve our global customers and keep our finger on the pulse of the trade. We are also rationalizing our U.S. West Coast storage operations, moving to smaller facilities where capacity better corresponds to actual utilization levels. This will enable us to reduce costs and improve profit margins. We have also rationalized our fleet operations in Gibraltar leading to better utilization and lower cost.
"Overall, we have taken cumulative measures through October 2017 that are expected to yield annualized cost savings of $24 million, exceeding our original goal of $20 million by 20%. We believe further cost savings opportunities exist across our network and have raised our goal to $30 million in annualized savings. This will be achieved through further rationalization and optimization of our network and asset mix as well as expansion into new, more profitable markets."
Spyros Gianniotis, Aegean's Chief Financial Officer, remarked: "Q3 2017 saw a 7.5% decrease in sales volume when compared to the prior quarter, mainly as the result of our reduced presence in Singapore and Fujairah and weather conditions in other areas. Gross spread per metric ton declined by 13.1%, to $14.60 from $16.80 in the prior quarter, reflecting the overall tough market environment compounded by the impact of extraordinary factors such severe weather in the form of three hurricanes and a refinery fire, disrupting procurement, impacting prices, margins and hedging. As a result, we recorded a net loss of $3.8 million for Q3 2017. Our adjusted EBITDA for Q3 2017 decreased by 37.3% from Q2 2017, down to $15.1 million from $24.1 million.
"While our results reflect a challenging marketplace, we continue to focus on optimizing our business and we were successful in reducing operating expenses by nearly $5 million quarter-over-quarter and have already exceeded our annualized savings goal of $20 million.
"We believe that as we continue to rationalize our global business in this competitive market, our balance sheet strength and geographic mix will differentiate Aegean from competitors that do not have the benefit of our broad network and solid capitalization." |
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