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THE global economic downturn, compounded by the H1N1 virus which has hit air travel, saw China Aviation Oil Singapore (CAOS) reporting a 36.9 per cent fall in second-quarter net profit to US$11.8 million from US$18.8 million in Q2 last year.
Q2 revenue fell 56 per cent to about US$810 million from US$1.84 billion in Q2 last year, no thanks to both the reduced demand and fall in prices for jet fuel. Earnings per share in Q2 dipped to 1.64 US cents from 2.6 US cents in Q2 2008.
For the first half, CAOS reported a 42 per cent fall in net profit to US$15.95 million following a 48.5 per cent fall in H1 revenue to US$1.47 billion.
The jet fuel supplier said that the volume of jet fuel procured and supplied to Chinese airports, plus its international oil trading, dipped by 4.5 per cent to 1.5 million tonnes in Q2, from that in Q2 last year when its exports were boosted by the Beijing Olympics.
Nevertheless, its Q2 jet fuel volume of 1.5 million tonnes was marginally up by 7 per cent from Q1 this year, due mainly to an increase in its trading activities.
Its Q2 net profit of US$11.8 million was in fact almost triple that in Q1, thanks largely to a turnaround in its associate, the jet fuel supply company at Shanghai Pudong airport, which earlier incurred losses due to higher procurement costs versus its sales revenues.
CAOS' CEO Meng Fanqui said that despite the challenging environment, CAOS has managed to extend its jet fuel trading activities beyond China.
For instance, CAOS in Q2 started to set up deals with refineries there - the first with China National Offshore Oil Corporation's new Huizhou refinery - to sell their 'export quotas' of jet fuel to markets outside China.
'Not only has this growth of the jet fuel trading business helped to offset the decline in jet fuel import volumes to the PRC, it has also become a key growth driver and profit contributor for CAOS,' he added.
On coming prospects, Mr Meng said that in line with the expected recovery in China's economy, and barring unforeseen circumstances, CAOS expects to achieve a better H2 performance, with the jet fuel trader taking 'proactive steps to further diversify its earnings base and actively seeking to invest in more synergetic oil-related assets'.
Separately, CAOS announced yesterday that it had appointed Chen Liming, the president of BP China, as a non-executive director, replacing Michael Bennetts as a BP nominee director of CAO.
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