CBL International Ltd Q2 FY2025 Earnings Call

Good morning, everyone, and welcome to CBL International Limited's Interim Results Presentation for the period ended June 30, 2025. Today's meeting will be conducted in English with simultaneous translation into Mandarin. Before we begin, I'd like to remind you that today's presentation will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. Thank you for joining us today. I'm Venus Zhao, Investor Relations and Public Relations Director of CBL International Limited. Presenting alongside with me are Dr. Teck Lim Chia, Chairman and Chief Executive Officer; and Mr. Nicholas Fung, Assistant Chief Financial Officer. We are excited to share our performance and achievements in the first half of 2025 and provide an outlook for fiscal year 2025. Let's begin with today's agenda. Our presentation will cover the following: first, company introduction; second, market trends and geopolitical impact; third, financial review; fourth, operational review; fifth, strategic initiatives and market outlook; and sixth, Q&A. Let me start with a brief introduction to CBL International. CBL International Limited, NASDAQ ticker, BANL, is the listing vehicle of Banle Group, a reputable marine fuel logistics company based in the Asia Pacific region that was established in 2015. We are a global marine fuel logistics provider operating under an asset-light business model. Our key services include bunkering services across strategic global ports, supplying both fossil fuels and sustainable fuels and serving container liners, bulk carriers and tankers. We are recognized as professional and trustworthy by our business counterparties, delivering flexible and integrated vessel refueling solutions. Our competitive advantages include: first, global ports network. We operate in over 65 ports across Asia Pacific, Europe, Africa and Central America; second, supplier relationships. We maintain strong relationships that enable us to offer competitive fuel pricing, superior service and operational efficiency. Third, customer relationships. With our extensive service, we can provide one-stop refueling solutions for customers, ensuring seamless service and operational efficiency. Fourth, growth strategy. We are focused on expanding our service network, increasing sales volumes and integrating sustainable fuel solutions to meet evolving market needs. This short corporate video will give you a comprehensive overview of our company's operation. I hope this video provides insight into who we are and the exciting opportunities that lie ahead. Please enjoy. Okay. Let's come back to our presentation. We've maintained long-term strategic partnerships with global industry leaders and are recognized in the industry as a professional and trustworthy provider of flexible and integrated vessel refueling services. Through collaboration with reputable local partners, we consistently deliver high-quality services to our clients worldwide. This ensures access to efficient, reliable and competitively priced bunker fuel solutions, meeting the diverse needs of the global maritime industry. Now we move on to market trends and geopolitical impact. Let's continue. Seaborne trade and container volume have demonstrated steady growth as shown in this review of maritime transport by the United Nations. According to UNCTAD, total seaborne trade grew by 2.5% in 2025, while containerized trade grew by 2.9%. Both are forecasted to maintain moderate annual growth rates through 2029. Ship supply increased by 6.1% in 2025, with demand growing by 3.5% to 4.5%. These numbers reflect a consistent recovery and expansion of global trade. CBL's bunkering operation network aligns strongly with this trend, with a presence in 13 out of the top 15 global container ports, including 9 of the top 10 ports such as Shanghai, Singapore and Ningbo-Zhoushan. On the customer front, CBL serves 9 out of the top 12 global container liners, which represent around 60% market share in global container liners. Let's move on to the slides, which highlight geopolitical tensions and market impacts. Global maritime trade faced significant disruptions in the first half of 2025 due to geopolitical tensions. First, let's review the whole global economic landscape. The broader economic environment remains uncertain. The recent decline in oil prices, which was a source of market uncertainty, directly eased our working capital. Seaborne trade showed moderate resilience, expanding by 1.5% in the first quarter and accelerating to a projected 2% in the second quarter. One of the notable disruptions in global shipping was the ongoing instability in the Red Sea, where vessels were rerouted via the Cape of Good Hope. This diversion extended Euro-Asia voyages by 10 to 14 days, resulting in increased fuel consumption due to longer travel distances. Consequently, demand for bunkering services surged at alternative ports along these rerouted shipping lanes. The situation in Ukraine and the accompanying sanctions contributed to the instability in energy markets, prompting the European Union to seek alternatives to Russian fuel supplies. This shift added volatility to global oil prices, creating challenges in fuel supply and demand. U.S. trade policy, particularly the tariffs implemented in April 2025, significantly impacted global trade flows, leading to a shift in shipping volumes. These tariffs directed cargo from traditional routes, especially between China and the U.S., to alternative regions such as intra-Asia and Euro-Asia. This adjustment influenced the demand for bunkering services along these alternative corridors, particularly in the Asia Pacific and the Euro-Asia regions. Despite these challenges, the CBL team responded swiftly and strategically. We targeted the increased demand from rerouted vessels, ensuring that our strategic supply chain could meet this demand effectively, resulting in a notable rise in sales volumes across Asia Pacific and Europe. Refraining from supplying vessels subject to the sanctions outlined in Lloyd's List containing the United Nations Security Council Consolidated List maintained operational efficiency, positioning CBL to navigate both the economic uncertainties. Let's move on to our financial highlights. Here are the first half 2025 financial highlights, showcasing CBL's strong performance. Total sales volume grew by 9.8% while revenue decreased by 4.4% to USD 255.2 million. Gross profit margin increased by 4 basis points to 1.02% and net loss narrowed by 38.8%. Our current ratio of 1.54 demonstrates healthy liquidity, while capital days at negative 4.44 highlights excellent cash cycle management. In the first half of 2025, CBL's revenue distribution and growth by geographic location highlight key market trends. China accounted for 67.5% of total revenue, followed by Hong Kong at 27.8% and Malaysia at 2.1%, with smaller contributions from Singapore, South Korea and others. Compared to the first half of 2024, revenue growth was seen with 26% growth in China and 131% in others. CBL's strategic focus on establishing a network to capture regional demands as they shifted is supported by macro seaborne trade volume in China and Europe. Diving deeper into our financial results, revenue, CBL's total revenue decreased by 4.4%, reaching USD 265 million down from USD 277 million in the first half of 2024. The decrease was mainly attributable to the decrease in marine fuel prices, which was partially offset by the increase in sales volume. Gross profit remained at a similar level, while gross profit margin slightly improved. We managed to maintain our gross profit with an increase in sales volume to cope with the challenging competition in the market. Operating expenses decreased to 17% from USD 4.12 million to USD 3.42 million. The decrease was due to harvesting the results of our investment in the past year on enlarging the port network, expanding our customer base and developing our biofuel operations, and initiatives undertaken in the first half of 2025 to streamline operations. Net income narrowed from a loss of USD 1.62 million in the first half of 2024 to a loss of USD 0.99 million in the first half of 2025. This 38.8% improvement was mainly driven by the reduction of operating expenses through the cost savings and control initiatives in the group's operations during the period. CBL's high liquidity and financial flexibility have enabled sustainable growth in the first half of 2025. Working capital management, high liquidity strengthens the cash cycle and supports business operations. Bank facility, ample bank facilities. Our total facilities amount to USD 50 million to fund future business expansion. Debt and leverage, focused on maintaining low debt levels provide flexibility for future growth. Just-in-time inventory management optimizes cash flow, minimizes storage risk and enhances efficiency, while minimal fixed assets maintain a lean asset base ensuring operational agility. Let's move on to operational review. Global development is part of CBL's 4-step strategy, and we have continued to see successful expansion since our IPO in 2023. As of June 30, 2025, CBL's global service network has expanded to 65 ports, an increase of 81%, marking a significant milestone in our growth strategy. The Asia Pacific region remained CBL's primary revenue driver, with key contributions from China, Hong Kong, Malaysia, Singapore and South Korea. Volume attributable to deliveries in Asia Pacific surged 9.1% year-on-year. Given several ports in Asia Pacific are major global shipping hubs, 13 of the world's top 15 container ports in 2024 according to the world's least bunkering operations in these regions account for a significant portion of deliveries. The expansion is especially evident in Europe, where our strategic focus on the ARA region has enhanced our market presence. We continue to develop our presence through our service network and maintain relationships with suppliers and customers. While current volumes in these regions remain steady, we are well positioned to scale operations in response to rising customer demand, ensuring we can meet market needs as they arise. In the first half of 2025, CBL achieved a 9.8% increase in sales volume despite a challenging macroeconomic environment marked by fluctuating oil prices and geopolitical instability. This growth was fueled by the expansion of our service network, the successful acquisition of new customers and a strategic shift towards non-container liner segments. As of June 30, 2025, CBL serves 9 of the world's top 12 container shipping lines, which contributed to nearly 60% of global container fleet capacity. The company's expanding customer base and broader service portfolio have reinforced its market position. Customer diversification. Revenue share from the top 12 liners increased to 60.1% versus 45.7% in the first half of 2024. Non-container sales, Bulk and Tanker accounted for 36.9%. Top 5 customer sales concentration declined to 60.4% in the first half of 2025 versus 66.7% in the first half of 2022. New customers from 2024 and the first half of 2025 contributed to 11.9% in the first half of 2025 sales. In the biofuel sector, CBL achieved significant growth in sales and volume in the first half of 2025, with biofuel sales seeing an impressive increase of 154.7% year-on-year, with volume growth reaching 189.5%. This growth can be attributed to CBL's continued leadership in the sustainable fuel market driven by the increasing adoption of biofuels among our customers. CBL has remained at the forefront of biofuel adoption with increased sales volume in Singapore, Malaysia, Hong Kong, and various ports in China. Globally, CBL facilitated the first B24 supplies across several markets. The launch of biofuel helped reduce GHG emissions by 20% compared to traditional fuels. CBL has obtained ISCC EU and ISCC Plus certifications in early 2023. We supplied biofuel in Singapore since March 2025 and proactively support customers to meet IMO GHG targets with sustainable and cost-effective alternatives. Looking ahead, CBL plans to further diversify biofuel offerings and strengthen our market position in green marine fields. In addition, the company will explore more greenfield options such as LNG and methanol to meet evolving sustainability regulations and industry demand.

Sure. Good morning. Thank you very much for joining our webcast this morning. Thank you, Mr. Wu, for the questions, and thank you, Venus, for the presentations. Well, I think we all know, the ocean is never short of challenges. Right now, we are actually facing geopolitical conflicts, the Red Sea crisis, tariff war, switching to biofuel and other renewable energies. We have been seeing all these challenges one by one all coming together, but we have managed to keep and maintain our growth. We have achieved a sales volume growth of almost 10% for the first half of 2025. And we have achieved continuous growth in the sales volume over the past few years. Amid all these challenges, we managed to keep down our expenses and reduce our loss. We will continue to strive to make more improvements. CBL's significant achievements include our rapid and strategic expansions on our global service network, growing from 36 ports at the time of our NASDAQ IPO in 2023 to 65 ports by the first half of 2025. This expansion underscores our successful execution of a scalable, asset-light growth model and solidifies CBL's presence across key maritime regions, including the Asia Pacific, Europe, Central Americas and Africa. Our growth was actually driven by targeting entry into high-demand ports and strengthening our partnerships with major suppliers and customers. We focus on customer-driven diversifications, especially in bulk carriers and tankers which is actually beyond our core container liner space. This move has allowed us to capture volume growth despite a very challenging market and a declining bunker price environment. CBL has navigated through significant headwinds, including geopolitical disruptions, oil price fluctuations and intensified competition in key markets where we operate. By leveraging our agile and capital-light structure, we minimize the fixed costs while securing scalable supply partnerships as well as our early investment in biofuel capabilities, such as the successful rollout of the ISCC certifications in China, Hong Kong, Malaysia and Singapore. We're supplying these ports to enable us to align with the tightening emissions regulations and customer demands for sustainable options. The strategic and operational agilities allow CBL to expand meaningfully without compromising our financial stabilities. We are turning challenges into differentiators and reinforcing our value propositions as a resilient and future-ready bunkering partner.

Okay. I see the second question on screen. CBL reduced its net loss by 38.8% year-on-year in the first half of 2025 despite challenges in the macroeconomic environment and oil price volatility. What were the key drivers behind this improvement? And how sustainable are the measures for the second half of the year? This question is from Ryan Chen from Financial. I would like to direct this question to Nick.

Thank you very much and thank you for everyone joining this event this morning. Well, in our first half of 2025, the improvement in bottom line of 38.8% was a result of efforts and resources invested to enhance our port network, expand our customer base and develop our biofuel operations over the past years. We now have to sustain our investment. As a result, we increased our sales volume by double digits in the full year of 2024 as well as the first half of 2025. We brought in new customers and lowered our reliance on the top 5 customers. Our biofuel sales have continued to demonstrate significant growth in the past 12 months. In addition, in the first half of 2025, by streamlining our operations and enhancing operational efficiency, we reduced our operating expenses by 17%. Going forward, we continue to look for investment windows to further expand our network, especially for the sustainable fuel segments. In fact, we have taken a more strategic approach to optimize our profitability. Thank you.

Thank you, Nick. And then we will come to the third question. The third question on screen is, given the ongoing geopolitical tensions and disruptions in shipping routes, how is CBL positioned to capture demand from rerouted trade flows especially in the Euro-Asia and intra-Asia corridors? This question is from Marcus Wong from Hang Seng Bank. I want to direct this question to William.

Thank you very much, Marcus, for raising these questions. The ongoing instabilities in the Red Sea, which has led vessels to reroute via the Cape of Good Hope, extending the Euro-Asia voyages by probably about 10 to 14 days. As a result of that, fuel consumption has increased. These three directions have caused a surge in demand for bunkering services at alternative ports along these new routes. CBL has actually targeted ourselves to meet these demands and capitalize on the opportunities. While the U.S. trade policy changes in April this year have also redirected cargoes to different regions, the shift in the trade flows has increased the demand for bunkering services in Euro-Asia and intra-Asia corridors. Luckily, with our CBL's extensive supply network in these regions, we are seeing additional requirements for our services. Therefore, despite all these disruptions, we have responded effectively, resulting in increased sales volumes in the Asia Pacific and other emerging markets. CBL's broad supply network has also positioned us to adapt to changing trade flows while maintaining efficient bunkering operations and seizing opportunities in these new alternate routes.

Thank you, Mr. Chia. Okay, please, all the investors, please type in your questions on the question for us, and I will read it now for management to address. So I can see the fourth question on the screen. Gross profit margins increased slightly to 1.02% in the first half of 2025. How does CBL plan to maintain or further improve margins as you continue expanding your supply network and customer base? This question is from Pauline Lau from Citibank. I would like to direct this question to Nick.

Okay. Thank you, thank you, Pauline of Citibank for these questions. Well, in the first half of 2025, we managed to maintain our gross profit at the same level as compared to 2024. Our sales volume increased while our gross margin improved from 0.98% to 1.02%. We continue to improve our gross profit by increasing sales volume riding on the foundation we laid down in our expanded network, improved customer base and growth in non-container liner and biofuel segments. Furthermore, we keep on exploring new sustainable fuels such as methanol and LNG for higher margins and to achieve economies of scale to reduce unit costs. We believe our profitability will improve through those measures and actions. Amid market volatility, conflict and geopolitical tension, we still achieved steady growth of sales models. As we adopt our cost-plus model in our pricing, our gross margin increased as oil prices came down in the first half of 2025. Looking forward, if world trades recover to normal when tariff wars stabilize, we expect there may be further improvement in our gross margins.

Thank you, Nick. I see more questions coming on the screen. And the next question will be non-container liner sales now account for 36.9% of revenue, reflecting successful diversification efforts. How does CBL plan to further grow this segment while maintaining strong relationships with container liner customers? This question is from Alvin Cheung from Prudential Brokerage Limited. I would like to direct this question to William.

Thank you, Alvin. Well, thanks to our network expansions in the last few years, we are able to provide reliable and flexible supply arrangements for our non-container liner customers, such as those bulk carriers and tankers. We can effectively and efficiently serve the non-container liner customers, where vessel schedules are less predictable compared to the container liners. Meanwhile, we continue to service 9 out of the top 12 container shipping liners, which represent nearly 60% of the global container fleet capacities. CBL has been actively targeting new customers, including mid-tier shipowners, bulkers, tankers, and others. Our customer diversification has actually reached a significant milestone, and non-container liner sales have become an important segment for us, accounting for about 36.9% of our revenue. Our sales concentrations for the top 5 customers have also reduced to 60.4% from the previous 66.7% in the same period.

Thank you, Mr. Chia. The next question is about the 17% decrease in operating expenses in the first half of 2025. What were the main cost efficiencies achieved? How do these efficiencies align with the company's long-term strategy for expense management? This question comes from Alan Wu at Phillip Securities, and I would like to redirect it to Nick.

Thank you, Alan, for raising these questions. Well, it has been our strategy to develop new ports, improve our customer base and diversify profit mix for the past 3 years, including 2024. Therefore, we deploy efforts and resources in this respect. In 2025, it actually is our harvest year rather than planting as compared to previous years in this regard. As some of these expenditures are nonrecurring in nature, such as port operation preparation for new ports, and market intelligence regarding new customers and new products like biofuel and methanol. We have kept operating expenses down. This enabled us to achieve promising results. In the first half of 2025, we implemented initiatives to streamline our operations and rationalize our resources; as a result, we have savings in operating expenses. To continue enhancing our operational efficiency, we utilize office automation and IT systems to streamline operations, allocate resources to explore advanced technologies for continuous improvement. Cost savings and upgrades to our back-end systems and implementing real-time order processing and data analysis will keep us investing for the future when good investment opportunities arise.

Thank you, Nick. Okay. We come to the next question. This question is, any expansion plan in the second half of 2025? And looking longer term, what does the 5-year plan look like for the business? And how do you expect its business model to evolve by 2030? This question is from Nelson Lee from ICBCI. And I would like to direct this question to William.

Thank you very much, Nelson, for these interesting questions. Well, I would say, despite the challenges posed by uncertain global economic conditions, geopolitical volatilities and regional crises, our gross profit remained stable. And in the first half of this year, we successfully reduced net losses, diversified our customer base and improved our operational efficiency and cost management. These strategies and measures we implemented have proven effective in navigating us through these turbulent times. Our strategy will continue to focus on strengthening our service network, growing our sales volume and further exploring sustainable fuels. We will continue to emphasize our extensive supply network in Asia Pacific and at the same time, looking to strengthen our presence in emerging markets. We will also continue to target new customers and new segments while deepening our strong relationships with current customers. We will promote stronger and more in-depth supplier relationships as well. We will ensure that we have the adequate financial resources for our expanded business. As we can see, in the past 12 months, we have successfully secured more banking facilities to support our growth. On the sustainable fuel side, biofuel adoption is actually one of our core sustainability strategies. We shall focus on compliance with the latest carbon emissions regulations and further explorations of biofuel products. At the same time, we will also look at other sustainable fuels as well. We are also regularly exploring different vertical and horizontal integration opportunities in order to strategically position ourselves to capitalize on the growth opportunities and support our customers in meeting their decarbonization goals. We are growing Banle to be a full-fledged bunkering service facilitator. We strive for customer segment diversification from customers, from containers to non-container customers, from fossil fuels to biofuel and renewable fuels from Asia to the world. We are proud to build Banle into a well-rounded bunkering service facilitator for the future.

Thank you, Lim Chia. Now we come to the next question. As the CEO of an international bunker service facilitator, what industry-specific observations and forecasts do you see taking place on a global scale? And how are you preparing your company to capitalize on this development? This question is from Alan Lau from Jefferies, and I would like to direct this question to William.

Thank you, Alan, for your questions. We can share some industry observations and forecasts for your reference. We see resilience in container shipping and fleet expansions, with the global container fleet increasing by more than 10% in 2025 compared to last year, driven by new vessel deliveries and the need for longer voyages due to Red Sea disruptions. However, this growth is tempered by trade policy volatilities that may temporarily dampen volumes, while also encouraging regional trade realignment toward intra-Asia and Euro-Asia corridors. The Red Sea disruptions have extended voyages by 10 to 40 days, increasing the demand for bunker fuel on alternative routes, while U.S. tariffs are redirecting trade flows and boosting inner-regions' bunkering demand, though they create near-term volatilities. On the regulatory front, we see a recovery in carbon emissions post-2024 in ocean shipping, aided by the normalization of growth and greater adoption of lower carbon fuels. The IMO’s 2023 GHG strategies and related regulations are encouraging biofuel adoption, with the green marine fuel market projected to grow at a CAGR of 50.4% from 2023 to 2030. In terms of biofuels, the demand has surged by 155% year-on-year in the first half of 2025, driven by regulatory compliance and customer decarbonization goals, especially with the Mediterranean ECA regulations requiring a 0.1% sulfur fuel. CBL is focused on network expansion and diversification, scaling to 65 ports globally and targeting high-growth hubs in the Asia Pacific and ARA regions to capture demand and reduce customer concentrations by expanding into bulk carriers and tankers. We are also advancing in biofuels, expanding partnerships with suppliers in the Asia Pacific, and maintaining our ISCC EU and ISCC Plus certifications for compliance. We assist customers in transitioning to biofuels, including providing technical systems for handling and information sharing about combustion characteristics. Furthermore, we are exploring opportunities in energy supply chains. On the financial side, we have secured sufficient banking facilities to support our working capital and growth plans. Although the market is challenging and competitive, we are confident our business model is resilient enough to navigate oil price volatility. In terms of technology and risk management, we have implemented IT tools for credit and risk assessments, along with real-time order tracking and monitoring systems to enhance efficiency. We use market intelligence tools to avoid sanctioned vessels, ensuring compliance and minimizing geopolitical risk. As these trends continue, CBL is well-positioned to leverage our agile network, biofuel expertise, and solid financial management while exploring integration opportunities in the face of rising demand for sustainable fuels and shifts in regional trade. We are prepared for these transformations.

Thank you, Lim Chia, for the very comprehensive explanation. And then due to limited time, we come to the last question. And this question is considering the U.S. new reciprocal tariffs update effective 7 August. What is the impact on CBL and the bunkering industry? This question is from Tony Fei from BOCI, and I would like to direct this question to William.

Thank you, Tony. Well, as CBL currently, we do not have operations in U.S. ports. Our direct impact from the U.S. tariff changes is minimal. However, we do see that tariffs have redirected cargoes from traditional routes not applied between China and the U.S. to alternative regions like intra-Asias and Europe. This shift has increased demand for bunkering services along the alternative corridors, as the areas we mentioned, Asia Pacific and Euro-Asia. We can see from reports indicating a 7.8% increase in exports to the Far East and a 2.3% rise in imports from the Far East to other regions, covering the period from January to May this year. We see these strict pattern changes have actually affected global shipping, particularly impacting the container sector due to the need for reroutings. As for our company, the overall impact has been limited. We have leveraged these changes through our extensive network and have been able to meet the demand generated from these new trade flows. Therefore, monitoring the evolving global trading landscape remains a priority for us in the second half of the year. Thank you.

Thank you, Mr. Chia. Okay. Thank you all for the questions from investors, and this concludes our investor presentation for today. Thank you for your participation and support of CBL. If you would like to have further discussions with our management, please feel free to contact us anytime for arrangement. Once again, thank you for your time today, and you may now disconnect. Thank you.

Thank you very much.

Thank you.