World Fuel Services’ operations were ‘significantly impacted’ in Q2 2020 due to the coronavirus-led global business downturn but while quarterly volumes fell in its marine fuels business the segment posted a 2% year-on-year increase in gross profit due to ‘improved performance in [its] core resale business’.
World Fuel Services’ marine fuel business held up well in Q1 2020, generating its highest quarterly gross profit in over five years ($59.3 million). However, at the time of its Q1 results announcement, the company did flag up that marine profits were expected to be ‘more meaningfully impacted’ in Q2 by the oil price slump and the coronavirus pandemic – and, indeed, the economic woes caused by the ongoing pandemic are more fully reflected in the company’s Q2 results.
Group revenue in Q2 was $3.16 billion, compared to $9.46 billion in the same quarter in 2019. Gross profit was $213 million, compared to $268.6 million in Q2 last year, and the company sustained a $10.2 million net loss, compared to a $37.6 million profit last year.
The downturn in the global aviation business translated into a 35% year-on-year gross profit decrease to $91.9 million for WFS’s own aviation fuelling segment.
Its marine business achieved a gross profit of $37.2 million, while its land operations posted a gross profit of $84.8 million, an 8% dip year-on-year.
Marine volumes were 4 million metric tonnes (mt), down from 4.9 million mt in the first quarter of 2020.
As previously reported, yesterday WFS also announced the $350 million sale of its Multi Service payment solutions business to private equity firm Corsair Capital. With the expectation that this deal will close in 90 days, the divestment will provide a capital injection which WFS says will be invested in its core business portfolio.
Commenting on Q2 performance, Chairman and CEO Mike Kasbar said: ‘The resilience of our diversified business model produced a respectable result for the quarter despite volumes across all of our operating segments being negatively impacted by the global shutdown due to the COVID-19 pandemic.
‘The continued demonstration of our value to the global supply chain and energy and logistics industries during these uncertain times will serve us well as the world begins its recovery.’
WFS said that it had taken steps build in resilience against the impact of the pandemic in Q2, by expanding ‘the restructuring of our operations to include the rationalisation of our global office footprint, including the transition of select offices to smaller or more cost-effective locations’.
Looking ahead, the company said it expects that the negative impacts of the pandemic will weigh on its operations through Q3, and it will continue to look at ways of improving its operating efficiencies and reducing costs throughout the current crisis.