Marine fuel company Aegean Marine Petroleum Network Inc. expects to report a net loss for the third quarter of 2017 ranging between USD 3.4-4.4 million as a result of volatile market conditions dominating the first half of the year.
The loss is being announced despite Agean’s efforts to cut costs as sales margins feel the heat of further pressure, depressing the company’s gross profit.
“In addition, a combination of three hurricanes and one serious refinery fire compounded what was already a tough environment in the third quarter. Despite modest improvement in some segments of the shipping industry, the oil markets and the marine fuel sector remain under great pressure,” Jonathan McIlroy, Aegean’s President, commented.
“We continue to see margin deterioration in many of our key markets resulting from lackluster demand and increased competition. This was a deciding factor in our recent decision to withdraw from the physical supply business in the Singapore market.”
Agean announced last week that it was exiting the Singapore market as a physical supplier as of January 2018, after almost 11 years, amid pressure from competition.
However, the company said that it would keep a trading presence in the Singapore market by continuing to employ a team of traders and support staff who will support its clients in the market.
McIlroy explained that despite the expected third-quarter loss, the company took cumulative measures through October 2017 that are aimed to yield more than USD 20 million in annualized cost savings.
In addition to the Singapore move, these measures also include downsizing of the company’s U.S. West Coast storage footprint, as well as other fleet savings through the deactivation of unproductive tonnage.
“Even after these savings are accounted for, we believe there remains further opportunity to cut costs across our network. We expect to discuss the market and these cost savings in more detail when we announce full third-quarter results,” he concluded.