O.W. Supply & Trading A/S

Company gain constitutes USD 24,732 million.
The company reported an after-tax gain of USD 24.7 million compared with an after-tax gain of USD 12.1 million in 2012. Before tax, the gain amounted to USD 31.0 million as against USD 15.4 million in 2012, which is above expectations for the year.
By the end of the financial year, the equity of the company is USD 25.9 million.
Revenue has increased to USD 1,996 million in the year 2013 compared with USD 1,664 million in year 2012. The increase of revenue of the year result from more activity in 2013 compared to 2012.
The marine fuel market
Marine refuelling is a logistics business and profits in the industry are driven by the volume of marine fuel distributed and the service margin that marine fuel distributors can add to each tonne of marine fuel they handle.

Global demand for marine fuel is primarily driven by growth in international trade and the level of activity in the marine transportation industry, in particular the number of vessels active at sea. The size of the marine fuel market is generally measured by volume, and is estimated to have grown by more than 3% per year since 2005 and proven resilient in economic downturns. In comparison, global GDP is estimated to have grown by approximately 2% per year in the same period. For the 12 months ended 30 September 2013, the total market volume of marine fuel was estimated to 372 million tonnes.

The group expects the global marine fuel market measured by volume to continue to grow at a compounded annual growth rate (CAGR) of 3-4% between 2012 and 2016.

The marine fuel market’s end users are mainly container vessels, bulk and general cargo carriers and tankers, which are estimated to account for approximately two thirds of total marine fuel consumption. The remainder is split among others, including passenger, cruise, fishing, naval and small vessels.

Market participants and trends
The marine fuel industry has been experiencing structural changes in recent years mainly benefitting leading independent distributors, resulting in an increased market share for this group of market participants. Although the industry has been consolidating, it is still fragmented and the distributor consolidation trend is expected to continue and favour larger distributors with global capabilities.

With an estimated 7% of the market, the group reached a joint leading global market share by volume for the last 12 months ended 30 September 2013.

The most important trends that have driven the market and that is believed to continue to drive the market are:

Retrenchment of major oil companies from the marine fuel market Major oil companies continue to possess a material share of the marine fuel market, but these companies have been reducing their focus on marine fuel distribution.

Global partnering and scale of operations Due to the significant cost of marine fuel as a proportion of a vessel’s total operating costs, marine fuel customers are increasingly perceiving marine fuel purchasing as a strategic business process and are professionalising their procurement operations. Accordingly, many large shipping companies are partnering with larger distributors that operate on a global scale.

Trade credit and risk management Given that marine fuel is the biggest cost of operating a ship and can account for more than 70% of a vessel’s operating costs (at current marine fuel prices), many shipping companies require significant amounts of capital to finance their marine fuel purchases. Accordingly, the availability of trade credit and the provision of risk management solutions as well as the financial stability of the counterparty are important decision parameters that customers consider when selecting a marine fuel distributor. Smaller local and regional distributors often lack the financial and organisational resources to be competitive on such parameters.

Increasing regulation Regulation of the oil and shipping industry has increased significantly over the past decade and is expected to continue to do so. Large distributors have the means to efficiently implement and operate under new regulation.

Increasing importance of scale and a global presence
Larger distributors are expected to benefit from economies of scale and improved terms when dealing with suppliers through large marine fuel off-take volumes. Furthermore, larger distributors are able to benefit from economies of scale in general and administration costs.