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DESPITE continuing weak demand for bunker fuels, Chemoil managed to chalk up a net profit of US$12.2 million for the second quarter ended June 30.
The Q2 net earnings were 44.6 per cent lower than the US$22 million in Q2 last year, which had the benefit of US$7.78 million in foreign exchange gains.
Compared with Q1's US$8.8 million, Q2 net profit rose 38.6 per cent, thanks largely to the marine fuel supplier's growing retail sales volumes, especially in Asia and Europe.
The April-June performance brought Chemoil's H1 net profit to US$21.1 million, down 13.2 per cent from US$24.3 million in H1 2008, which benefited also from US$14.4 million in insurance claims.
Q2 revenue dropped 49.1 per cent year-on-year to US$1.29 billion, resulting in a 51.3 per cent fall in H1 revenue to about US$2.28 billion.
Earnings per share in Q2 was 0.94 US cent, down from 1.7 US cents in Q2 last year.
But Mike Bandy, Chemoil's chairman and CEO, said that the quality of the group's earnings continued to improve, as profits this year came from its core business, and not from one-off gains.
Chemoil's gross contribution per tonne, a key performance indicator, was US$11.61 in Q2. This was a 10.4 per cent increase over Q2 2008's US$10.52 and almost one-third more than Q1 2009's US$8.74.
The group's focus on markets which gave it better margins helped. In Q2, its retail sales volumes grew 6.2 per cent to 2.23 million tonnes from Q2 2008's 2.1 million tonnes.
Mr Bandy added that the direct retail sales to shipowners - which now account for 60 per cent of Chemoil's total sales volumes - gives it better margins, as the fuel is delivered all the way to the end-customer, which means that it can enjoy margins all through the supply chain.
Credit controls and customer relationships also helped, he said, adding that Chemoil's entry into new markets in India and the Middle East 'is on track and performing as expected'.
Mr Bandy said that overall, oil prices were lower in H1 this year than last year. 'But while there was less downside risks, there was also reduced demand for fuels.'
'But the demand destruction is now approaching the bottom,' he said, adding that while the economic recovery may not necessarily be V-shaped, Chemoil is poised to seize opportunities that arise. This will be through its three-pronged strategy of expanding into more markets and ports, introducing new, innovative products and increasing efficiencies in its end-to-end supply chain.
On the founding Chandran family's discussions with various parties involving a possible sale of some, or all of its shares, in the company, Mr Bandy said that 'the discussions are continuing, but it's too early to have any answers if it materialises'.
Chemoil closed up 4 per cent at 51.5 US cents yesterday.
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