Venus Zhao - IR & Public Relations Director:.
Teck Lim Chia - Chairman & CEO:.
Raymond Chiu - CFO:.
Good morning, ladies and gentlemen. I'm Venus Zhao, Investor Relations and Public Relations Director of CBL International Limited. Thank you for joining 2024 Interim Results webcast of CBL International Limited.
Before we begin, I'd like to remind you that today's presentation will include forward-looking statements made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act 1995. These statements are subject to the risks and uncertainties that will cause actual results to differ materially from our expectations.
Today's meeting will be conducted in English with simultaneous translation into Mandarin. We'll begin with the presentation, followed by the Q&A session. You can find the presentation deck on the webcast page and in the Investor Relations section of our company website.
We're excited to introduce to you the key members of our leadership team who are driving our vision forward. Let me introduce our speakers for today's session. We have Mr. Teck Lim Chia, the Group Chairman and CEO. Mr. Raymond Chiu, our Chief Financial Officer. And myself, Ms. Venus Zhao, Director of Investor Relations and Public Relations.
Please allow me to give a presentation of our interim results. We'll divide it into five chapters. Company Introduction, Investment Highlights, Financial Review, Operational Review, Strategic Initiatives, and Market Outlook. The first chapter is the Company Introduction. Who we are.
CBL International Limited, NASDAQ ticker, BANL, is the listing vehicle of Banle Group, a reputable marine fuel logistic company based in the Asian Pacific region that was established in 2015. We are committed to providing customers with one-stop solution for vessel refueling, which is referred to as bunkering facilitator in the bunkering industry.
Our clients are international container liners, bulk carriers, and tankers. We facilitate vessel refueling mainly through local physical suppliers in 60 plus ports worldwide in Asian Pacific, Europe, and Africa. We are top two players in both the Hong Kong and China bunker facilitating markets in 2023. We are committed to sustainable fuel solutions.
This short corporate video will give you a comprehensive overview of our company's operation. I hope this video provides valuable insights into who we are and the exciting opportunities that lie ahead. Please enjoy. [Audio-Visual Presentation].
Let's continue. According to UNCTAD, total seaborne trade and containerized trade are forecast to grow 2.1% to 2.2% and 2.9% to 3.2% per annum from 2024 to 2028 respectively. According to BIMCO, container volume for all trade is forecasted to grow 5% and 6% respectively in 2024 and 2025.
According to Frost & Sullivan, Asia and Oceania accounted for 70% of global container port throughput in 2023. CBL's bunkering operation network presence has covered 9 out of the top 10 global container ports in 2023.
The ongoing Red Sea crisis, which began in October 2023, has significantly impacted the maritime routes due to geopolitical tensions and conflicts in the region.
The reduction in traffic through critical conduits such as the Suez Canal and Bab el-Mandeb Strait has forced ship owners and charters to reroute vessels, leading to increased transit times and operational costs. The voyage from Rotterdam to Shanghai increased from 25.5 days to 34 days.
Free rates on affected routes have surged due to these disruptions, as shipping companies face longer voyages and higher insurance premiums. This disruption has also had a significant impact on the bunkering industry.
The demand for bunker fuel in Asia-Pacific and Western Europe has risen sharply due to the rerouting of vessels around the Cape of Good Hope and other longer routes.
Ports in regions such as China, Singapore, Mauritius, and Cape Town have experienced a surge in bunkering volumes, driven by the need for vessels to refuel more frequently along these extended routes.
This increased demand has led to greater price volatility, with the price of low-suffer bunker fuel on routes rose immediately after the crisis began, and began to stabilize and decline somewhat.
Even though they remain higher than pre-crisis level, the decrease is attributed to the market adjusting to the new demand patterns and re-opening of certain supply chains. Moving on to what makes CBL standout. Bunkering is the critical process in maritime logistics, and we excel at it.
Our primary role is to bridge the gap between ship operators, oil traders, and physical distributors. We handle all the logistics required to refuel vessels, including obtaining and comparing quotations, negotiating prices, arranging physical delivery, and managing any airport occurrences that arise. The value we provide to our clients is significant.
By acting as a single point of conduct, we reduce the administrative burden and time cost for ship operators, offer favorable pricing through demand aggregation, and provide flexibility to manage unexpected events.
We are not just delivering fuel, we are delivering a comprehensive, reliable service that ensures our customers' vessels stay on schedule and operational. Let's draw into a balanced business model, which is built around efficiency and scalability. We operate on a cost-plus-pricing mechanism, ensuring a positive gross profit on every transaction.
This model not only secures our profitability, but also allows us to offer a premium service to our clients. Our extensive serving network, now spanning over 60 ports, is key to capturing additional business opportunities. This network provides our customers with the flexibility they need to refuel at convenient locations across the globe.
Achieving economy subscale allows us to lower our unit operating costs. Banle is also an asset-light company. We practice just-in-time inventory management, which minimizes our fixed asset investment and reduces financial risk.
Our deep relationships with suppliers and our possession of all necessary licenses further enhance our operational capabilities. Lastly, our operational efficiency is evident in our rapid cash flow and the fact that we maintain no long-term debt on our balance sheet. We minimized interest expenses from account receivable factories.
These factors contribute to our ability to remain agile and responsive to market needs, ensuring that we can continue to grow sustainably. Let's move on to our investment highlights. Now we summarize the key investment highlights of Banle International. These highlights are the pillars of our growth strategy and our value proposition to investors.
First, our growth track record speaks for itself. We've achieved a revenue CAGR of 23% from fiscal year 2020 to fiscal year 2023, demonstrating our ability to expand and capture market share even in challenging environments. Second, our financial health is strong. We are in a position with access to bank facilities and positive free cash flow.
This financial health not only supports our ongoing operations, but also enables us to seize new opportunities as they arise. Third, we pride ourselves on our operational efficiency with high liquidity. Fourth, we hold a leading market position in key markets, particularly in Hong Kong and China.
Our strong relationships with top-tier clients and our expansive service network give us a competitive edge. Finally, our growth potential is significant. We are not just expanding our network, we are also innovating in areas like sustainable fields, which positions us for longer-term success in an evolving industry.
Let's move on to the next part, financial review. Let's take a closer look at our financial performance for the first half of 2024. Our revenue grew by an impressive 44.4% year-on-year, reaching $277.2 million.
This growth was largely driven by a 39.4% increase in sales volume as we expanded our global supply network and tapped into rising demand from both existing and new customers. Our current ratio stands at 1.51, reflecting our strong liquidity position.
Additionally, our cash balance increased by 30.9% to $9.7 million, further strengthening our financial stability. Our capital days is minus 3.6 days, and free cash flow has increased by 131.8% to $2.3 million.
The reduction in capital days indicates that we are managing our account payables and account receivables more effectively, leading to faster turnover and enhanced operational efficiency.
The significant increase in free cash flow reflects our improved cash flow management, providing us with greater financial flexibility for investment and growth opportunities. Driving deeper into our financial results, our revenue of $277 million represents a significant increase of 44.4% compared to the first half of 2023.
This significant growth was driven by a 39.4% year-on-year increase in sales volume, attributed to the expansion of our global supply network and higher marine fuel demand due to geopolitical factors.
However, our gross profit declined by 32.2% to $2.71 million, primarily driven by the reduction in premium sold to customers and led to lower gross profit per ton, which was partially offset by an increase in volume sold.
Our operating expenses rose by 64% to $4.12 million, driven by higher selling and distribution expenses related to our sales growth, strategic investment expansion into our supply network to new geographic areas and development of our biofuel operations.
These expenses are necessary for our long-term growth and are expected to yield positive returns in the coming years. Our net loss of $1.62 million was driven by lower gross profit margin and higher operating costs.
Despite these challenges, we are confident in our ability to navigate the current market environment and return to a path of improved profitability as we continue to scale and optimize our operations. Let's now examine our revenue breakdown by geographic location.
China and Hong Kong remain our largest markets, contributing 51.3% and 34.8% of our revenue in the first half of 2024, respectively. Malaysia and Singapore also play important roles in our regional portfolio, accounting for 10.9% and 2.3% of our revenue.
We have seen strong revenue growth across all these regions, with Singapore, Hong Kong, Malaysia, China and South Korea experiencing a year-on-year growth of 150%, 52%, 41%, 38% and 25%, respectively.
This geographic diversity not only strengthens our market presence, but also helps mitigate risks by spreading our revenue sources across multiple key markets. Our continued focus on expanding our network and customer base in these regions is expected to drive future growth and solidify our leadership position.
Finally, let's review the key highlights of our balance sheet as of June 30, 2024. We maintain a highly liquid capital structure, with cash accounting for 41% of our net assets. This solid cash reserve not only provides us with financial stability, but also enables us to seize opportunities as they arise.
We operate on a debt-free basis with zero long-term borrowings. Instead, we leverage available non-recourse factoring facilities, which allows us to maintain liquidity without incurring debts. This approach minimizes financial risks and positions us favorably in the market.
Our commitment to just-in-time inventory management further enhances our cash flow and avoids storage risks. This strategy not only improves our operational efficiency, but also aligns with our goal of maximizing profitability. We also maintain a lean asset base with minimum fixed assets.
This strategy allows us to maintain agile and responsive to market changes, reducing overhead costs and enhancing our overall efficiency. Finally, our rapid cash conversion cycle is a testament to our efficient operations. We engage mostly in short-term activities, transactions with efficient operations.
In summary, our balance sheet reflects a company that is not only financially stable, but also strategically positioned for sustainable growth in the years ahead. Now, let's review the company's operational performance. Let's talk about one of the key drivers of our recent success, our service network expansion.
Since our IPO in March 2023, we have significantly expanded our global service network from 36 ports to over 60 ports across Asia, Europe, and Africa. This expansion has been instrumental in enabling us to serve a broader customer base and meet the growing demand for our services.
One of the notable milestones in this expansion is the opening of our new office in Ireland in late 2023. This strategic move has bolstered our market coverage in Europe and enhanced our local sourcing capabilities, positioning us to better serve our customers in this region.
Additionally, we successfully launched bunkering services through local physical suppliers in new locations, including our inaugural services in Mauritius, Africa in May 2024. This further extends our reach and demonstrates our commitment to growing our footprint in key markets around the world.
Now, let's dive into our sales volumes and oil prices per metric ton on our business. In the first half of 2024, our sales volume surged by 39.4% compared to the same period in 2023. This growth was driven by the expansion of our service network and the rising demand from both existing and new customers.
In the first six months of 2024, the average bunker prices per metric ton increased by 3.6% compared to the same period last year. Our ability to serve eight of the world's top 12 container shipping lines, which together account for 87.1% of global container fleet capacity, has been a major factor in this volume increase.
Our increased market presence in key regions like China, Hong Kong, Malaysia, and Singapore, along with our new port coverage in Africa and India, has contributed significantly to our strong sales performance.
We implemented strategies to expand the service network to beyond our traditional geographic areas in Asia-Pacific and Europe to Africa, and beyond container liners to include bulk and tanker businesses. As the global shipping industry moves towards decarbonization, Banle is at the forefront of promoting sustainable fuels.
In the first half of 2024, Banle's biofuel volumes and revenue increased by 84.6% and 95.8% respectively compared to the same period of 2023. We've made significant strides in this area, having obtained ISCC-EU and ISCC-Plus certifications in early 2023.
These certificates underscore our commitment to providing compliant and sustainable fuel options that meet the evolving needs of our customers and industry. In July 2023, we commenced our B24 biofuel operations in Hong Kong, followed by successful bunkering in Yantian, Shekou, and Nansha in China, as well as Port Klang in Malaysia.
The B24 biofuel blend offers a 20% reduction in greenhouse gas emissions compared to conventional marine fuels, making it an attractive option for ship operators looking to reduce their carbon footprint. Looking ahead, we plan to further expand our biofuel supply capabilities and explore other sustainable fuel options.
Our work in biofuel is expected to facilitate the transition from fossil fuels to sustainable fuels, creating a second growth curve for Banle and positioning ourselves as a leader in the sustainable fuel market. Finally, let's take a closer look at our global service network and the extensive reach we have achieved.
We are in the top two market share positions in both Hong Kong and China. As of the first half of 2024, Banle is providing vessel refueling services in over 60 ports worldwide. This map illustrates our network, which spans key locations across Asia, Europe, Africa, and beyond.
Our presence in these strategic ports ensures that we can provide timely and reliable refueling services to our customers. We are recognized by our business counterparts as a professional and trustworthy partner, known for delivering flexible and integrated vessel refueling services.
As we continue to expand and strengthen our network, we remain committed to delivering high-quality services that meet the needs of our customers and drive our growth. Looking ahead, Banle is focused on helping ship operators navigate the energy transition and comply with increasingly stringent emission regulations.
The IMO's EEXI, Energy Efficiency Existing Ship Index and CII Carbon Intensity Indicator regulations, along with the FuelEU Maritime Initiative, are driving the industry towards greener pathways. These regulations require significant reduction in greenhouse gas emissions with targets of 2% by 2025, 6% by 2030, and up to 80% by 2035.
Ship operators that fail to comply with these regulations will face significant financial penalties. However, there is a growing demand from corporations to reduce their scope-free emissions, those generated by their supply chain and logistics operations.
Banle is well-positioned to help these companies achieve their sustainability goals by providing biofuels and other sustainable fuel options. Our B24 biofuel, for example, is a transitional product that allows ship operators to reduce their carbon footprint without making substantial investments in alternative fuel fleets.
This flexibility is crucial, as many operators are hesitant to invest in new technologies due to the uncertainty of the market and existing depreciation timelines of their current assets. We are pioneers in promoting sustainable fuels in the Asia-Pacific region by leading the change in biofuel adoption and other sustainable practices.
Banle is not only contributing to the decarbonization of the shipping industry, but also positioning itself for long-term success in a rapidly evolving market. We are not just focused on growth. We play an important role in the value chain in the bunkering market. We have prominent local partners as our suppliers.
Since the launching of our B24 biofuel operations in July 2023, we have successfully delivered these sustainable operations in Hong Kong, Shekou, Yantian, Nansha and Portland. We strongly believe that biofuel is the inevitable trend during the energy transition from fossil fuels to sustainable fuels such as LNG, Methanol, Ammonia or Hydrogen.
Owing to biofuel's compatibility with traditional fuel oil engines without requiring additional hardware investment and sacrificing efficiency. In the future, we are also exploring other sustainable fuels such as LNG, methanol and ammonia, et cetera, to provide our customers, depending on market demand.
Now, move on to the strategic initiatives and market outlook. As we look ahead, let me outline Banle's strategic initiatives as well as our market outlook. First, expand service network, our recent actions.
Strengthening Asia-Pacific market, Banle has prioritized bolstering its presence in the Asia-Pacific region where economic resilience is driving increased demand for shipping and bunkering services.
Expanding into Europe and other regions, Banle is actively expanding into Europe and other regions, capitalizing on the robust demand for sustainable fuels driven by stringent environmental regulations and decarbonization targets. Second, maximize sales volume impact. Diversify offerings and enhance the market position.
Banle's efforts to diversify its fuel offerings, including biofuels and sustainable fuels, have enhanced its market position. Increasing market share. Banle's strategy is focused on increasing its market share by expanding into high-growth regions. Leveraging economics of scale. Banle's expansion allows the company to benefit from economics of scale.
Third, explore sustainable fuels, future plans, compliance with IMO and EU regulations. Banle is committed to aligning with the latest environmental regulations set by the International Maritime Organization, IMO, and the European Union. Biofuel adoption. Banle is investing heavily in the adoption and expansion of biofuels.
Exploring other sustainable fuel options. In addition to biofuels, Banle's exploring alternative sustainable fuels, such as LNG, methanol, and hydrogen. As we execute these strategies, we will also continue to monitor and manage risk effectively, ensuring that we remain agile and responsive to market dynamics.
Let's take a closer look at the market outlook and how it aligns with our strategic initiatives. The global green marine fuel market is expected to grow to $201.35 billion by 2030, with a staggering CAGR of 50.4% from 2023 to 2030. This growth is driven by increasing regulatory pressures and a global shift towards decarbonization.
Banle is well positioned to capitalize on this trend. Our expanding service network, commitment to operational efficiency, and focus on sustainable fuel solutions put us at the forefront of this market transformation. We are also well prepared to navigate the challenges associated with oil price fluctuations and geopolitical conflicts.
Our cost-plus pricing mechanism ensures that our profitability is not directly impacted by oil price volatility, while our proactive risk management framework allows us to adapt to changing market conditions. We will continue to enhance operational efficiency and cost control.
In terms of strategic acquisitions and partnerships, we are exploring opportunities that enhance our operational capabilities and further strengthen our market position. By investing in technology and innovation, particularly in sustainable fuels, we are positioning Banle to lead the industry into a more sustainable future.
With that, we conclude our presentation today. We've covered Banle's strategic initiatives, our strong financial and operational foundation, and the exciting growth opportunities ahead, particularly in the rapidly expanding sustainable fuel market..
I'd like to open the floor to any questions you may have, whether it's about our recent performance, our future plans, or the broader market environment. Please feel free to ask your questions, and we will do our best to address them. Please type in your questions in the Q&A box, and we will read them aloud for management to address.
Okay, I've seen some questions online. The question one, question one is from Shenzhen Cross-Field Asset Management, Wu Fenlan [ph]. And the question is, what is Banle's macroeconomic outlook for the remainder of 2024? This question I would like to ask Mr. William..
Thank you, Venus. Thank you very much for the questions. Well, we do see that the global economy has shown signs of moderate growth in the first half of 2024, which we believe this is actually driven primarily by the resilient activities in the emerging market, particularly in Asia.
And also with the IMF and other institutions projecting a moderate growth for the same year, the trend in the first half of this year shall extend into the second half.
And we believe that this is actually supported by the continued recovery efforts from various governments around the world, despite the geopolitical challenges as well as inflationary pressures. And we strongly believe that the emerging markets will continue to play a critical role for the rest of the year.
Talking about something closer to us, the international seaborne trade, we see that it shows a moderate growth in the first half of this year as well. And the outlook for the second half of the year remains positive, with the demand for shipping services in the regions such as Asia-Pacific and Europe are expected to continue to drive our business.
And we can see that the United Nations Conference on Trade and Development projects the international seaborne trade will continue to grow steadily in the next three to four years.
And despite the ongoing geopolitical tensions in the Red Sea region, which we do see that there are a lot of re-routings of vessels around the Cape of Good Hope, have sharply increased the bunker demand for the Asia-Pacific and Western European market.
With our well-established network, we are able to meet the increasing demands from our existing as well as new customers. So the Red Sea disruptions probably we will see that will continue for the rest of 2024. Therefore, we expect the bunker demand will continue to remain high from the marine logistic operators.
And for the second half of this year, we expect to see further exacerbations in the demand for biofuels, as well as other decarbonization efforts driven by various regulatory bodies such as IMO and European Union. And with the tightened rules, such as a FuelEU Maritime becoming effective next year, we believe biofuel demand is going to go steadily.
In summary, we maintain a cautiously optimistic outlook on the global economic landscape. While for us is that our strategy will still continue to focus on growth, on efficiency and stability, which will enable us to navigate the challenges anticipated for the remainder of the year. And this will position our company for a continued long-term success.
Thank you..
Thank you, William. Please submit your questions through the Q&A box, we will read them aloud, your questions for management to address. So we see the second question online is from J.H. Debrie [ph].
The question is, what is your view on the sustainable fuel market? Will sustainable fuel will be the winner in the long run? I would like to address this to William..
Thank you very much for the questions. But we do see that the transitions from fossil fuels to sustainable alternatives in the maritime industries is actually exacerbating. And that is actually driven by both market forces and as well as the regulatory pressures, which personally I refer to as the pull and the push factors.
On one hand, the shippers and also the end customers are increasing their focus on ESG principles. The demand to further reduce their Scope 3 emissions, which place a more significant pressures on the logistic providers, as well as the container liners to adopt to more sustainable marine fuel.
And at the same time, we do see that the international regulatory bodies like the IMO and also the EU are enforcing stricter regulations and imposing penalties to crop carbon emissions from the marine logistic companies.
So this pull and push factors are actually fostering a rapid energy transitions, compelling logistic companies to adapt to their customer demands, as well as the meeting the regulatory compliances to maintain their comparative ages. So we believe that the sustainable fuel market is positioned for rapid growth in the coming years.
And from a public study, we do see that the green marine fuel market is actually expected to grow from 11.5 billion last years to about 200 billion by the year 2030. So we believe that this is actually a very promising market.
And as of today, we still do not see any clear directions of who is going to be the winner in the sustainable marine fuel market. We have observed many ship operators actually experimenting with different alternatives, as many of the new ships that are under construction were built with dual fuel systems.
That means that they can run on LNG combined with fossil fuels or methanol with traditional fuels, for example. This system actually offers the flexibilities and helping to ease the transitions to the future sustainable options.
As no player in the market now is confident enough to be just banging on one single energy, but everybody wish to retain the abilities to power their new ships with the traditional fuels and with the options for new sustainable fuels.
So from this perspective, what we can also see is that biofuel will then become a very crucial transitional options over the next decade, as we can be used in the existing traditional fuel engines. That means that there will not be any requirements to change the hardware of the vessels in order to adapt to biofuel.
While using biofuels, it also has a significant reduction in carbon dioxide. That will help the operators to comply with the upcoming regulations requirements from the various regulations. In the near future, let's say that we have LNG dual engine vessels, which you can't locate the suitable LNG fuel in certain parts in the world that you are calling.
Then the owners may opt to use fuel oil or you can use biofuel if they prefer to have a lower emission purpose. This will actually help the operators to increase their flexibilities. The marine fuel market is actually growing at an annual rate of about 10% to 12%.
This is actually driven by, first of all, the regulatory incentives and also the push for renewable energy. So by 2030, we expect the biofuel could account for about 10% to 15% of the marine fuel market, especially if the supply change and the cost challenges can be addressed.
We believe that there's still a long way to go for the sustainable marine fuel, such as methanol, LNG, ammonia or hydrogen to be it. And any one of these to become a truly so-called a dominant market force, because it actually requires a lot of investment, time and also the expertise to put that into a scalable production and supply in the world.
So in terms of the potential winner in the long run, personally, we believe that the methanol probably stands out as a more favorable option. As according to the Classification Society, the order book for methanol powered vessel has increased sharply compared to the other sustainable fuels.
Methanol is also projected to grow at an annual rate of 20% to 25% through 2030. And this is actually driven by the increased regulatory pressures to reduce emissions and also the relatively ease of converting existing vessels to use methanol. Thank you..
Thank you, William. Please submit your questions through the Q&A box and we will read them aloud for management to address. Okay, we see the next question is from PineBridge, Chen Yi [ph]. And the question is, how is Banle optimizing supply chain to manage the increased demand for biofuels? I'd like to direct this question to William..
Thank you. Thank you for the questions. Well, as Banle, we are proactively in establishing our comparative age in biofuel supplying to align with the international environmental regulations, which include the IMO greenhouse gas reduction strategies as also the EU's fuel, EU maritime initiatives.
These regulations will actually drive the future biofuel demand. And we are actually well positioned to meet this demand. We have aligned our supply chain with the industry standards. We have obtained the ISCC EU as well as the ISCC Plus Certifications as early as in early 2023.
And we are committed to sustainability and compliances with International Environmental Standards. This is to ensure that our biofuel operations can meet the highest standards of sustainability criteria. And for the company, we have launched our B24 biofuel operations in Hong Kong in mid-2023.
And we have then expanded our biofuel bunkering services to locations such as Yantian, Serco, Nansha in China, as well as in Port Klang in Malaysia. This operational expansion has actually strengthened our presence in the regions with the growing biofuel demand.
And in the first half of the year 2024, we actually achieved 84.6% increase in our biofuel volume. And that is also attributed to a 95.8% in the rise in our revenue compared to last year. This has actually reflects the growing demand of biofuel in the market and also our ability to cope with the evolving needs from the customers.
And we have proactively established strategic partnerships with our local suppliers in the region where the biofuel markets are more developed. Through these cooperation’s, we are able to offer a comprehensive one-stop solution for the bunkering of the biofuel. This will ensure a consistent and reliable supply to our end customers. Thank you..
Thank you, William. The next question comes from Jeff Kone from the Wall Street Resource. And this question is, what drives Banle's revenue growth in the first half of 2024? And will we continue? This question I would like to ask Raymond. It's about the revenue growth in the first half of 2024..
Our revenue went up by about 44.4% to about $277 million in the first half of 2024. And this growth was mainly brought about by a close to 40% increase in our sales volume. And partly because of the 3.5% increase in the average bunkering price as compared with the same period in 2023.
While the up and down movement of the bunkering price is something out of our control, the significant growth of our sales volume was mainly driven by the expansion of our supply network, from a coverage of 36 ports when we were listed in March 2023, to now more than 60 ports across Asia, Europe and Africa.
During this period, we have expanded our customer base beyond the container liners to the bulk carriers like tankers. And the opening of a new office in Ireland also enabled us to capture new customers from Europe, who practically would have bunkering needs in the Asia-Pacific region as well.
In respect of these environmental concerns that rises rapidly on a global basis, we have always taken a proactive approach in the development of sustainable fuels to deal with the issue.
Our biofuel business, as just mentioned by our CEO, has achieved a close to 85% increase in the sales volume and also a close to 96% growth in the sales revenue in the first half of 2024.
We strongly believe the adoption of a market share expansion strategy will in the long run, enable us to optimize our supply chain, leverage economies of scale and reduce unit costs. The strategy will be carried on and revenue growth is expected to continue. Thank you..
Thank you, Raymond. Okay, please submit your questions through Q&A box and we will answer your questions. So the next question we see comes from Mingyi from [indiscernible]. And the question is, why did gross profit margin decline despite revenue growth? And how is Banle addressing this? I would like to ask Raymond for this question..
Thank you. Our gross profit declined by about 32.2%. In this period, we indeed faced tough market conditions and stiff competition. While we had to, though reluctantly, lower the premium we offered to our customers to capture more business and strive for the rapid expansion of our market share.
We have mitigated the GP reductions by increasing a lot our sales volume, but still the decline was substantial. And this margin squeeze is obviously the price that we have to bear in the meantime under this unstable market situation.
The disruption of key shipping routes, particularly through the Suez Canal due to the Red Sea crisis, has intensified competition in the bunkering industry. The marine logistics companies facing higher operational costs have become very price sensitive towards the bunkering price.
And that pushes us to offer more competitive pricing, which in actual effect is squeezing our gross profit margin.
No matter how, we shall continue to focus on increasing our market share, thus allowing us to leverage economies of scale, and also optimizing our unit costs through higher order volumes and enhancing procurement power, so as to reduce operation costs and improve profitability.
As the market conditions stabilize, we believe our operations will be able to support a higher gross profit. The expansion of the supply network will effectively help to capture new customers and achieve a continuous increase in our sales volume. And that will mitigate the negative impact of the margin squeeze. Thank you..
Thank you. Okay, please submit your questions on the Q&A box. We see the next question is coming from Go Investing, [indiscernible]. And the question is about, can you please provide insights into Banle's future expansion plans and how they align with the company's long-term growth strategy? I would like to direct this question to William..
Okay, thank you very much for the questions. Let's probably start with expanding our service network. We have actually prioritized to strengthen our presence in the Asia-Pacific region, as what we have done in the past.
This is what we see is a high growth market with economic resilience to drive the demand for shipping, so leading to the demand for debunking services. So by expanding in this region, we are able to capitalize on the new opportunities and leveraging on our existing supply network to bring in more clients.
And also, on the other hand, is that we are also moving into other regions, especially in the European market. This is a strong demand in the European market for sustainable fuels, which is driven by the stricter environmental regulations and also the decarbonization goals set by the various authorities.
And expanding into this part of the world is actually to broaden our strategies to diversify our geographical footprint, as well as to solidify our positions in the global market. Next, we will probably talk about maximizing our sales volume.
We have been working very hard to diversify our fuel offerings, not only focusing on the traditional fossil fuels, but also on the biofuels and also looking into the future sustainable options. This has actually boosted our market positions.
Expanding these services will actually allow us to meet the growing global demand for both the conventional and the sustainable fuels. Our strategy is actually to focus on increasing market shares, especially in the high-growth regions. As we can capture new business opportunities in these areas, we are also setting up ourselves for sustained growth.
And through our expansion, we are able to benefit from the economic upscale. Increasing our volume and also improving our procurement power by aggregating the volume, we are actually optimizing our cost and enhancing our operational efficiency. We believe this is actually the key to maintain our profitability as we continue to grow our customer base.
And going forward, definitely we will be looking into the future sustainable fuels. We are fully committed to meet the latest environmental regulations from the various regulatory bodies. These regulations are focused on reducing carbon emissions and they do provide a great opportunity for us to lead in supplying sustainable fuels in the future.
At the same time, we are making investments in biofuels, partnering with local suppliers, setting up operations in key markets. All these efforts actually position ourselves to meet the growing demand for sustainable fuels while we are supporting the global efforts to reduce carbon emissions.
As well as in addition to biofuel, we are also exploring other sustainable fuels like LNG, methanol, ammonia, hydrogens and so forth. This actually aligns with our strategies to stay ahead of the curve as the maritime industry transcends from the current fossil to the cleaner energy resources.
Also, besides the above strategies which is talking about our organic growth to the company, we are also looking into some strategic acquisitions and partnerships if the opportunity arises. We will look at working with our key players across the supply chain, both on the upstream and the downstream.
This will actually strengthen our market presence, diversify our revenue streams and also can enhance our ability to meet the global growing demand for both conventional and sustainable fuels. In short, our future expansion plans actually closely align with our long-term growth strategy.
We focus on geographical diversification, increase our market share and driving sustainability initiatives. And we are confident that the company is well positioned to success in a dynamic global market. Thank you..
Thank you. Okay, due to time constraint, we now take the last two questions. Please submit your question through the Q&A box and we will read them aloud.
The next question we see is, what led to the shift from net income in 2023 to a net loss in the first half of 2024 and what steps are being taken to return to profitability? I would like to ask this question to William..
Thank you. Thank you very much. Well, for the first six months and June 30th, 2024, we have navigated a shift in the net profit, moving from a gain of approximately $1.15 million last year to a loss of about $1.62 million this year. This transition reflects the dynamic and also the comparative natures of our industries.
The reasons are primarily due to the lower gross margin, which is influenced by the challenging market conditions, as well as the intensified competitions in the industries. As you know that we are trying to expand our market shares, we are actually facing more competition as well.
And higher operating costs is actually due to the fact that we are investing in building our client base in order to both increase our sales and also better position ourselves once the market -- the bunker market returns to a more normal state.
However, despite all these headwinds, we remain steadfast at our commitments to our strategic resilience and also we have a long-term growth.
We are mainly focusing on our long-term growth besides expanding on our revenue streams, which means that we expand on our market segment, regions, as well as our customer base, we are also shifting towards the biofuel and in futures, what we call sustainable fuels. And we are also leveraging on the technologies in order to control risk.
The strategic partnerships and long-term planning’s are also key in ensuring our sustainable profitability in moving forward. Thank you..
Thank you, William. So due to time constraint, we take the last questions. We see the question online is, what factors contributed to the rise in operating expenses and what is the expected impact on future costs? I would like to ask you, William, this question..
Thank you. Well, operating expenses actually rose by approximately 64% to 4.12 million, which is up from 2.51 million last years, the same period.
This increase was actually attributed to the higher selling and distribution expenses related to our sales growth, strategic expansions in the company supply network to a new geographical areas and the development of biofuel operations. We do see that the expansions of our service network and also to increase our market share is actually essential.
We focus on the current areas in the Asia Pacific for the last couple of years, and we have quite an extensive coverage in the Asia Pacific market. But at the same time, we do see that there are many other opportunities that is beyond the Asia Pacific, for example, in Europe. That's why we have expanded our service network.
We have invested in our expansions into Europe in order for us to get more new European customers, which they might have the demand over in Asia Pacific. While at the same time is that we can service better to our existing customers who are in the Asia Pacific region into Europe. When they have the requirements in Asia, we are able to serve them.
When they have the requirements in Europe, we are able to serve them as well. So you can see that our service extension network is not only on a geographical expansion. We are also providing value-added services and also increase our market shares.
On the other hand, is that we do see that there is a great opportunity for us to develop and explore the sustainable fuel markets, such as biofuel. We have spent a lot of time and efforts as these are completely new logistic services.
We are talking about the component of biofuel, which consists of fossil as well as UCOME, and UCOME traditionally has been considered as chemicals rather than fuel. There is actually a need for us to work out with new suppliers to assess new supply chain and also to work on the new supply network.
That is the reason why we have spent a lot of time, efforts and resources in developing all these new market sustainable fuel for us. And of course, in future we will be looking into hydrogen, ammonia, LNG, methanol. All these will lead us into the next stage of the growth of the companies. We have to move forward.
If we continue to stay and focus on the fossil fuel, sooner or later we will be outdated. So we will have to look forward and increase and invest in all these things. In many other industries, you can put all these your -- what you call it, the future investments, capitalize them as investments.
But for us is that, we will have to expense all these expenses. So that is actually contributing to a higher sales and marketing distribution expenses for us. Of course, bearing in mind that we are now a listed company, there are a lot of fixed costs that we will have to maintain our listed status of the company.
So that all these factors have contributed to the rise in, what you call, operating expenses. Thank you..
Thank you, William. Due to time constraints, this concludes our Investor Presentation for today. Thank you for your participation and support for CBL. If you would like to have further discussion with our management, please contact our IR team. Once again, thank you for your time today. You may now be disconnected. Thank you..
Thank you..