Aviation oil trader CAO's net profit grows 6.1% in 2013

The net profit of Singapore- listed China Aviation Oil (Singapore) Corporation Ltd, or CAO, grew 6.1 percent year on year in 2013 to 70.2 million U.S. dollars, the group announced on Friday. It was also the fifth consecutive year of record net profit for CAO, the largest aviation oil trader in the Asia Pacific region. The year 2013 remained challenging for aviation oil traders, with the outlook for the advanced economies improving in the second half while the growth momentum of the emerging economies slowed, Sun Li, chairman of the group, said in the annual report. However, the still robust growth of China's aviation sector provided the support for the operation of CAO, he said. CAO's revenue grew by 5.4 percent to 15.6 billion U.S. dollars. Its total supply and trading volume of jet fuel and other oil products grew by 11.4 percent to a record 16.5 million tons The group's gross profit, an indicator of the profitability of the company's supply and trading business, grew by 22.8 percent to hit 52.5 million U.S. dollars. "This is testament to the resilience of the group's business model and ability of the trading team to generate profit growth under the challenging market conditions," he said. Sun said the group continued to leverage on its competitive strength as the largest jet fuel purchaser in the region to strengthen its capability in jet fuel entrepreneurial trading. He said that the group's efforts in diversifying its earnings streams through the trading of other oil products have yielded positive results. The total trading volume of other oil products grew 42.2 percent to 6.1 million tons in 2013, with the profitability increasing significantly. The associated companies contributed profit of 46.5 million U.S. dollars in 2013. Sun said that he expected the robust Chinese aviation sector to provide key support for the operations of CAO. Sun said that the oil prices are expected to remain high and subject to volatility. The dynamics of the international oil market are changing as the United States is expected to become an oil exporting country thanks to its rising shale production. Oil product exports from Asia and the Middle East will continue to rise with the emergence of mega-refineries while Europe will require more imports as its refineries continue to shut down. Global oil demand growth is expected to be mainly driven by the transport sector, said Sun. "While such changing dynamics will create opportunities for trading, it also means that trading strategies will have to be adjusted and competition is expected to intensify," he said. Meng Fanqiu, chief executive officer of the group, said that despite its relatively strong position in the Asia Pacific region, CAO will also invariably face limited growth potential if confined to Asia Pacific where growth in demand has been slowing. He said CAO will enhance its capabilities for globalized operations. Its asset network will be improved to support business expansion and the company will establish its business value chain through greater synergy and optimization. It also aims to improve the trading of other oil products by establishing and consolidating our structural advantages