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GP Global started suppying at Jebel Ali in March but soon afterwards the company ran into headwinds. ©GP Global
GP Global started suppying at Jebel Ali in March but soon afterwards the company ran into headwinds. ©GP Global

Weathering the storm?

Major player World Fuel Services has brought in respectable results in the face of the worldwide Covid-19 turmoil, but GP Global took a battering

This year so far has clearly been exceptionally testing for all bunker industry players.

In that context World Fuel Services’ (WFS) Q2 results are notably strong despite a headline 20% year on year decline in gross profit, to US$213.9 million.


Bunkering is only a part of WFS’ fuel supply portfolio but performed robustly, generating a gross profit of $37.2 million, an increase of 2% year on year. A WFS statement says this profit growth was “principally related to improved performance in our core resale business, offset by significantly lower volume due to a decline in activity in connection with the pandemic”.


The company’s chairman and CEO, Michael Kasbar said: “The resilience of our diversified business model produced a respectable result for the quarter despite volumes across all of our operating segments being negatively impacted by
the global shutdown due to the COVID-19 pandemic.”


WFS noted that, beginning in the first quarter of 2020, the aviation, marine and land transportation industries, along with global economic conditions generally, have been significantly impacted by the coronavirus pandemic. It said: “A large number of our customers in these industries have experienced substantial reductions in their operations, especially commercial airlines and cruise lines, which have been particularly impacted by the travel restrictions and stay-at-home orders. Customers in our marine and land segments have also been adversely affected by these restrictions, as well as the extended shutdown of various businesses in affected regions.

The Q2 result may have been relatively good but the company warns that the rest of the year is likely to be to be difficult. It notes: “While the COVID-19 pandemic and associated impacts on economic activity had a limited adverse effect on our results of operations and financial condition for the first quarter of 2020, we have since seen a sharp decline in demand and related sales as large sectors of the global economy have been adversely impacted by the crisis. Accordingly, our results of operations during the second quarter of 2020 were significantly impacted as a result of the effects of the pandemic.

Since the level of activity in our business and that of our customers has historically been driven by the level of economic activity globally, we generally expect these negative impacts to continue through the third quarter as the recent increases in COVID-19 cases have further delayed the reopening of various economies around the world.”


In response to the current situation WFS is restructuring some of its activities and pushing ahead with cost reduction initiatives. This includes the sale in September of its Multi Service payment solutions business to Corsair Capital, a New York based private equity firm specializing in business and financial services for about $350 million.


By contrast, UAE-based GP Global has had a less happy year so far. It started well enough. In March it announced the launch of its new bunkering operation at the port of Jebel Ali. Also in March, it launched a physical supply operation in Hamburg with a 1,500 dwt bunker barge. Several other announcements at around the same time highlighted how the company was extending its worldwide reach.

However, in late July the company issued a statement announcing it had “undertaken a financial restructuring exercise to combat the challenges that have arisen due to a global economic meltdown amid the ongoing C-19 pandemic”.


The statement also said: “While there are several rumours about the financial condition of our group floating around, we would like to reiterate to and assure our partner and stakeholders, that as a highly reputed organisation we are being targeted by vested interests who do not wish to see us succeed and grow higher and higher. The group strongly and vehemently denies all such rumours and is being made a victim of blatant lies, by spreading of totally false and factually inaccurate information by these vested interests.”


In August allegations emerged of fraud by some of its employees in the UAE. Soon after the company appointed FTI Consulting’s Rod Sutton as its Chief Restructuring Officer and also hired UK-based financial restructuring specialist firm Quantuma.


In September there were signs that the company’s troubles were not over when it was reported that its 6,200 dwt tanker GP B3 had been arrested at Pipavav, India.


Meanwhile, on a more positive note, KPI Bridge Oil and OceanConnect Marine have announced that the two companies have formally completed a merger to create a new brand and entity, KPI OceanConnect.


The merger means the company now has a 170-strong team operating across 15 locations globally.


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