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China Aviation Oil (Singapore) Corporation Ltd. (CAO), reported a net profit of 49.2 million U.S. dollars for the 12 months ended December 31, 2014 (FY2014), a 30 percent decrease from the previous year, the company said in a press conference on Thursday.
The largest physical jet fuel trader in the Asia-Pacific region said the decrease in net profit was mainly due to lower profit contributions from associated companies.
Despite the plunge in net profit, total revenue increased 9.6 percent from a year ago to a record 17.1 billion U.S. dollars, mainly due to an increase in the trading volumes of both middle distillates and other oil products, the company said, adding that total supply and trading volumes for jet fuel and other oil products increased 23.5 percent to a new high of 20.4 million tons in FY2014.
Jet fuel supply and trading volume, which is part of the Group' s core jet fuel supply and trading operations, increased 15.9 percent to 12.1 million tons for FY2014, mainly supported by strong demand from China's civil aviation industry as well as the Group's growing international aviation fuel business.
Earnings from the Company's investments in oil related assets through its associate companies were 43.2 million U.S. dollars for FY2014, compared to 46.5 million U.S. dollars a year earlier. The company attributes the drop primarily to the impairment of inventory valuation at Shanghai Pudong International Airport Aviation Fuel Supply Company Ltd (SPIA) on the back of the steep decline in global oil prices.
"Oil markets are inherently volatile but the trading environment from the second half of FY2014 have been especially challenging with increased volatilities given the steep decline in oil prices." Meng Fanqiu, Chief Executive Officer of CAO, said, adding "The slump in oil prices also brings with it opportunities as it presents structural shifts in the global economy and we will continue to focus on building a global trading network to expand our businesses through this structural transition."
Looking ahead, the Group said it will continue to look to invest in strategic assets along the value chain and focus on expanding its aviation marketing business to more airports outside China.
CAO is the sole supplier of imported jet fuel to the civil aviation industry of China. It also supplies jet fuel to airports outside the Chinese mainland, in markets such as the Asia Pacific, Europe, North America and the Middle East. It also engages in international trading of jet fuel and other oil products.
