Chemoil posts Q2 net profit

CEO points to 'signs of gradual improvement' as Chemoil strives to optimize its operations.

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Updated on 11 Aug 2010 06:32 GMT

SGX mainboard-listed Chemoil, one of the world’s leading suppliers of marine fuel, has today announced a net profit attributable to equity holders of US$3.2 million for the second quarter of 2010.

The figure is $9 million, or 74 percent, below the US$12.2 million net profit achieved during the corresponding period last year, but is a $16.7 million improvement on the US$13.5 million loss recorded in the first quarter of 2010.

In an analysis of the first six months of the year, Chemoil recorded a net loss of US$10.3 million, which represents a US$31.4 million decline compared to last year's first half profit of $21.1 million.

The group’s gross contribution per metric tonne (GCMT) of US$5.00 per tonne was $6.60, or 57 percent, lower than the US$11.6 per tonne achieved in the second quarter of 2009, but was US$3.26 per tonne higher than during the first three months of this year when the group's gross contribution per metric tonne was US$1.74 per tonne.

During the first six months of this year Chemoil's gross contribution per metric tonne was US$3.4 per tonne, which was US$6.8 per tonne, or 67 percent, below last year's results during the same period.

Chemoil's year-on-year sales volumes rose by 0.3 million tonnes, or 8 percent, to 4 million tonnes betwen April and June 2010, whilst sales volumes also rose by the same margin when compared to the first three months of this year.

Sales volumes were also higher during the first six months of 2010 compared to last year, rising by 0.3 million, or 4 percent, to 7.7 million tonnes.

Chemoil’s Chairman and CEO, Mr Mike Bandy, commented: “While most of our market segments have generally experienced improved performance this quarter, we are still facing pressures on our wholesale retail margin spreads which continue to remain at reduced levels in several strategic locations.”

“Despite the difficult economic conditions, there are signs of gradual improvement in certain ports on our footprint. Our retail marine fuel sales improved in Asia and select ports in the Americas, and we also recorded a rise in cargo and ex-wharf sales volumes leading to an improved GCMT of US$5 per MT. Our management is continuously seeking opportunities to strengthen the profitable segments of the business and optimize under-performing operations through efficiency improvements in order to deliver sustained profitability.”

Chemoil’s Chief Financial Officer, Jerome Lorenzo, said: “Our cost reduction efforts are starting to show encouraging results as we continue streamlining our operations. These measures include assessing our storage and barging efficiencies, reducing overheads, and managing our inventory held. This process is ongoing and we expect further results to materialize in the succeeding quarters.”

Mr Bandy concluded: “The first half of this year has been challenging and the wholesale-retail spreads continue to be low. As a reflection of the benefits of its diversification strategy, the Group recorded positive contributions from associates and joint ventures. It is the Group’s aim that through these carefully and strategically selected business affiliates, we will jointly develop new markets and optimize the company’s supply chain to contribute increasing returns to Chemoil’s operations.”

“We are confident that our continued approach of reducing costs, increasing efficiencies and seeking selective growth opportunities will continue to deliver improved profitability across our business segments.”