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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Stolt Tankers posts profit decline on higher bunker costs, reduced hedging gains

Uptrend in bunker prices only partially offset by fuel surcharges and gains on bunker hedges, says CEO.

The Stolt Virtue was refuelled during the first concurrent bunkering operation at Stolthaven's facility in Jurong Island, Singapore, on January 30, 2018. Image credit: Stolthaven Terminals

Updated on 04 Oct 2018 10:06 GMT

Stolt Tankers reports that third-quarter (Q3) operating profit fell year-on-year (YoY) by $13m, or 37.8 percent, to $21.4m. In a sequential comparison with the previous three-month period, the result was down $5.1m, or 19.2 percent.

The quarter-on-quarter (QoQ) decline in Stolt Tankers' Q3 operating profit was said to be due to the reduced (by $7.9m) gains on bunker hedges - $1.3m versus the $9.2m gain on bunker hedges seen in Q2 - along with a $2.1m increase in bunker costs net of surcharges.

Overall bunker costs rose QoQ by $6.8m in Q3 as the average price of intermediate fuel oil consumed climbed 14.1 percent to $437 per tonne, from $383 per tonne in Q2.

Q3 revenue of $312.4m, up from $308.6m in Q2, was principally driven by a rise in bunker surcharge revenue of $4.8m. Deep-sea revenue increased by $3.6m in the period - mainly reflecting a hike in bunker surcharges as fuel prices climbed, Stolt Tankers said.

Discussing the results, Niels G. Stolt-Nielsen, CEO of parent company Stolt-Nielsen, remarked: "At Stolt Tankers, bunker fuel prices continued to trend upward. The increase was only partially offset by bunker surcharges and the positive impact of our hedging programme, while spot rates were held down due to excess available tonnage."

Stolt-Nielsen results

In its key results for Q3 (June to August), Stolt-Nielsen posted a net profit of $2.3m, down from $18.3m during the prior-year period. However, for the nine-month period ending August 31, net profit was slightly up on last year at $50.8m, versus $49.3m in 2017.

Operating profit in Q3 dipped YoY by $1.2m, or 2.1 percent, to $54.8m. But similar to net profit, operating profit for the first nine months was slightly up YoY at $158.2m, compared to $156.1m a year ago.

In terms of bunker hedging, Stolt-Nielsen explained that it purchased forward contracts on 111,000 tonnes of fuel for delivery in each of 2017 and 2018, and 48,000 tonnes for delivery in 2019, with initial expiration dates ranging from three to 24 months forward.

A realised and unrealised gain of $10.2m was recorded for the nine months ended August 31, 2018, Stolt-Nielsen noted.

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