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CAO's profit falls 2.9% for Q2 on larger allowance for doubtful debts

JET fuel trader China Aviation Oil (Singapore) (CAO) on Wednesday posted a 2.9 per cent drop in net profit to US$28.4 million for its second quarter ended June 30, down from US$29.3 million a year ago.

The decrease was mainly due to higher operating expenses that resulted from a higher provision for expected credit loss (ECL), also known as allowance for doubtful debts.

Earnings per share (EPS) stood at 3.31 US cents for the quarter, down from 3.4 US cents a year ago, the mainboard-listed company said in a filing during the midday break on Wednesday.

Revenue grew 2.85 per cent to US$5.97 billion for the quarter from US$5.80 billion for the year-ago period, primarily due to higher supply and trading volumes.

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CAO’s total supply and trading volumes rose 6.62 per cent to 10.6 million tonnes during the quarter. Volume for middle distillates products increased about 26 per cent to 5.7 million tonnes, of which the volume of jet fuel supply and trading grew 19 per cent to 4.1 million tonnes.

Meanwhile, trading volume for gas oil was up 44 per cent to 1.66 million tonnes, whereas trading volume for other oil products such as fuel oil and crude oil fell by 9 per cent to 4.9 million tonnes.

Total expenses surged 36 per cent to US$8 million for the quarter, from US$5.9 million a year ago. This was mainly due to the higher ECL provision of US$4.32 million, compared to the US$1.4 million provision for the year-ago period.

No interim dividend was declared for Q2, the same as a year ago.

For the six months to June 30, net profit declined 2.53 per cent to US$54.8 million, while revenue shrank 2.21 per cent to US$9.68 billion.

The lower half-year revenue was mainly attributable to the decrease in oil prices and trading volume, CAO said.

EPS for the half year was 6.37 US cents, down from 6.53 US cents for the year-ago period.

Wang Yanjun, chief executive officer and executive director of CAO, said: “In spite of the challenging conditions in the oil markets and the continued uncertainties in the macroeconomic environment, the group has delivered a resilient performance for the first half of 2019.”

“In particular, our middle distillates business has continued to see growth, driven by an increase in jet fuel supply and trading volumes,” Mr Wang said.

Shares of China Aviation Oil were trading at S$1.19 as at 2.49pm on Wednesday, up one cent or 0.85 per cent.