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Fri 23 Feb 2018, 12:42 GMT

World Fuel Services posts 2017 loss as marine gross profit falls 16%


Non-cash impairment charge of $91.9m said to be primarily related to its marine business.



World Fuel Services Corporation (WFS) has posted a full-year net loss of $170.2 million in 2017, compared to the $126.5 million net profit achieved during the previous year.

Full-year revenue increased year-on-year (YoY) by $6,679.7 million, or 24.7 percent, to $33,695.5 million, whilst gross profit was up $33.2 million, or 3.7 percent, to $932.2 million, which was a record for the US firm.

Full-year adjusted net income in 2017 declined by $20.3 million, or 13.8 percent, to $126.6 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $4.3 million, or 1.5 percent, to $295.9 million.

Division results in 2017

The company's marine segment generated a gross profit of $126 million, which was a YoY decrease of $23.5 million, 15.7 percent, and was said to be mainly driven by "the continued weakness in the maritime environment".

Marine revenue increased by $1016.8, or 14.1 percent, to $8,199.3 million.

In terms of income from operations, the marine segment posted a $57.8 million loss compared to a profit of $30.2 million the year before.

For WFS's other divisions, aviation generated a gross profit of $441 million, representing a YoY increase of $40 million, or 10 percent, whilst the land segment achieved a gross profit of $366 million - a 5 percent rise YoY.

Comments

Commenting on the year's results, Michael J. Kasbar, chairman and chief executive officer of World Fuel Services, said: "We generated $932 million in gross profit representing modest growth over 2016. Strength in our aviation segment was meaningfully offset by challenging market conditions in marine and parts of our land segment.

"We are optimistic about 2018 as we have begun executing on an organizational redesign to drive greater operating efficiencies. We continue to sharpen our portfolio of business activities while executing on a solid pipeline of initiatives to accelerate organic growth across the business, with opportunity for selective strategic investments, as well."

WFS Q4 results

In the fourth quarter (Q4), WFS posted a net loss of $193.1 million compared to the $2.2 million net profit of $2.2 million recorded during the corresponding period in 2016.

Adjusted net income in Q4 was up $2.7 million, or 18.9 percent, to $17.0 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew $3.2 million, or 5.6 percent, to $60.5 million.

Revenue increased by $1,079.9 million, or 13.9 percent, to $8,872.0 million, whilst gross profit rose $7.6 million, or 3.4 percent, to $229.9 million.

Q4 charges and tax

WFS explained that it recorded a non-cash impairment charge of $91.9 million, in Q4, which primarily related to its marine fuels business.

"This was primarily a result of growing weakness in maritime markets over the last year, along with a further decline in demand for price risk management products and our decision to exit our marine business in certain international markets. The goodwill impairment is a non-cash charge and does not impact our current financial flexibility, and we believe our overall cash generating capabilities remain strong," WFS said.

WFS also recorded a restructuring charge of $59.6 million in Q4, which was said to be due to the exit of two specific business activities.

Q4 results also reflected an income tax charge of approximately $157 million, which included a $144 million one-time transition tax payable over eight years, as a result of U.S. tax reform.

As WFS intends to utilize its U.S. net operating losses, the company expects to only pay approximately $100 million over the eight-year payment period.

"Looking ahead, the new 21 percent domestic corporate tax rate should offer the potential for improved returns related to our large pipeline of strategic investment opportunities in the US," WFS said.


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