China Aviation Oil H1 net profit falls 19.1% to US$19.7m despite higher revenue

JET fuel trader China Aviation Oil (CAO) on Thursday (Aug 4) posted a net profit of US$19.7 million for its half year ended Jun 30, 2022, down 19.1 per cent from US$24.3 million in the same period last year.

This comes despite revenue for the half year rising 7 per cent to US$9.3 billion from US$8.7 billion a year earlier, as a result of the increase in oil prices, the group said in a bourse filing.

The drop in net profit was mainly attributable to a decrease in share of results from the group’s associates and other income, as well as an increase in expenses, which was partially offset by an increase in gross profit, CAO added.

Earnings per share stood at 2.29 US cents for the half year, down from 2.82 US cents a year earlier.

Gross profit was US$21.5 million for the half year, up from US$15.7 million a year earlier, mainly due to higher gains derived from trading activities, the group said.

CAO reported a loss of US$1 million in other operating income for the half year, compared to gains of US$0.72 million a year ago. The group mainly attributed this to higher foreign exchange loss, citing the weakening of the yuan against the US dollar in the first half of 2022.

Contributions from the group’s associates stood at US$9.7 million in H1 2022, down from US$16.1 million the year before. This was mainly due to lower contributions from Shanghai Pudong International Airport Aviation Fuel Supply Company.

No interim dividend was declared for the half year.

Wang Yanjun, chief executive officer of CAO, said the group remains confident about the longer-term outlook for the global aviation industry, buoyed by the continued easing of travel restrictions and strong pent-up demand for travel.

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But he noted the resurgence of Covid-19 variants, which could result in travel restrictions being imposed by some countries and regions.

“…Coupled with airport disruptions and labour shortages globally, (this) will undoubtedly lead to an uneven pace of recovery across regions with the Asia-Pacific significantly lagging the other regions over the near term,” he added.

According to him, CAO remains “cautiously optimistic” about its performance for the current financial year, as the group continues to build on its jet fuel supply and trading network, complemented with trading in other oil products.

It will also continue to focus on long-term profitability by seeking opportunities for strategic expansion through investments in synergetic and strategic oil-related assets and businesses, he pointed out.

Shares of CAO closed at S$0.865, up S$0.01 or 1.2 per cent, before the results were announced.