CBL International Limited Q2 FY2024 earnings call

Service Network Expansion

• Since IPO in March 2023, expanded global service network from 36 ports to over 60 ports across Asia, Europe, and Africa. Opened new office in Ireland in late 2023 and launched bunkering services in Mauritius in May 2024.

Sales Volume and Biofuel Growth

• Sales volume surged 39.4% in H1 2024 due to expanded network and rising demand. Biofuel volumes and revenue increased 84.6% and 95.8% respectively in H1 2024, with B24 biofuel blend offering 20% reduction in greenhouse gas emissions.

Sustainable Fuel Commitment

• Committed to sustainable fuels, aligned with IMO and EU regulations. Obtained ISCC-EU and ISCC-Plus certifications. Exploring other sustainable options like LNG, methanol, and ammonia.

In the first half of 2024, CBL International Limited's revenue grew by an impressive 44.4% year-on-year, reaching $277.2 million. This growth was driven by a 39.4% increase in sales volume. However, gross profit declined by 32.2% to $2.71 million, primarily due to reduced premiums and lower gross profit per ton, though partially offset by increased volume. Operating expenses rose by 64% to $4.12 million. Net loss was $1.62 million. Revenue breakdown by geographic location: China and Hong Kong contributed 51.3% and 34.8% respectively, Malaysia 10.9%, and Singapore 2.3%.

Macroeconomic Outlook

• Cautiously optimistic on global economy with moderate growth expected, emerging markets critical. Bunker demand expected to remain high due to Red Sea disruptions continuing in 2024. Biofuel demand to increase further due to regulatory pressures.

Market Growth

• Green marine fuel market expected to grow to $201.35 billion by 2030 with a CAGR of 50.4% from 2023-2030. Focus on growth, efficiency, and stability to navigate challenges.

Geopolitical and Market Risks

• Geopolitical tensions in Red Sea leading to vessel rerouting, increased transit times, and operational costs. Price volatility in bunker fuel due to increased demand and market adjustments. Intense competition in bunkering industry leading to margin squeeze despite revenue growth. Need to balance investment in sustainable fuels with profitability.

Q: What is Banle's macroeconomic outlook for the remainder of 2024?

A: Moderate growth expected, with emerging markets critical, and bunker demand high due to Red Sea disruptions.

Q: What is your view on the sustainable fuel market?

A: Rapid growth expected, with biofuel as transitional option, and methanol possibly a favorable option long-term.

Q: How is Banle optimizing supply chain to manage increased demand for biofuels?

A: Obtained ISCC-EU and ISCC-Plus certifications, expanded biofuel operations, and strategic partnerships with local suppliers.

Q: What drives Banle's revenue growth in the first half of 2024?

A: Expansion of supply network to over 60 ports and increase in biofuel sales.

Q: Why did gross profit margin decline despite revenue growth?

A: Lower premiums to capture market share and intense competition due to Red Sea crisis.

Q: Insights into Banle's future expansion plans?

A: Strengthen Asia-Pacific presence, expand into Europe, focus on sustainable fuels, and consider strategic acquisitions/partnerships.

Q: Shift from net income in 2023 to net loss in H1 2024 and steps to return to profitability?

A: Lower gross margin, higher operating costs; focus on market share growth and economies of scale.

Q: Factors contributing to rise in operating expenses and expected impact on future costs?

A: Sales growth, expansion to new regions, development of biofuel operations; investments in sustainable fuels will continue but aim to optimize costs.