CBL's Q2 2025 Earnings Call: Contradictions in Service Network Growth, Diversification Metrics, and Tariff Impact Assessments

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 15, 2025

Financials Results

• Revenue: $265M, down 4.4% YOY (vs $277M in 1H24)
• Gross Margin: 1.02%, up from 0.98% in 1H24 (+4 bps)

Business Commentary:

* Sales Volume Growth and Revenue Decline: - CBL's total sales volume grew by 9.8%, while revenue decreased by 4.4% to USD 255.2 million in the first half of 2025. - The growth in sales volume occurred despite a challenging macroeconomic environment, driven by expanding services and strategic customer targeting. The revenue decline was primarily due to decreasing marine fuel prices.

• Operational Efficiency and Cost Management:
• CBL reduced its operating expenses by 17% to USD 3.42 million in the first half of 2025.

• This improvement was due to cost-saving initiatives and streamlining operations, which included investment in port networks and biofuel operations, enhancing operational efficiency.

• Biofuel Sales and Market Share:

• CBL's biofuel sales saw an impressive increase of 154.7% year-on-year in the first half of 2025.

• This growth is attributed to increased customer adoption of biofuels and CBL's leadership in sustainable fuel markets, driven by regulatory compliance and environmental concerns.

• Geopolitical Impacts and Market Adaptation:

• Disruptions in global shipping, including the instability in the Red Sea and U.S. tariffs, led to shifts in trade flows and increased demand for bunkering services.
• CBL effectively responded to these changes by expanding its supply network and capturing increased demand in the Asia Pacific and Euro-Asia regions, demonstrating resilience in navigating uncertain conditions.

Sentiment Analysis:

• Sales volume +9.8% YOY; gross margin rose to 1.02% from 0.98%; operating expenses down 17%; net loss narrowed 38.8% (from $1.62M loss in 1H24 to $0.99M loss in 1H25); network expanded to 65 ports (up 81% since IPO); biofuel sales +154.7% YOY with volume +189.5%. Management highlights ample bank facilities and strong liquidity.

Q&A:

• Question from [indiscernible] (Southwest Securities): Among growth areas, what was the most significant achievement, how were results produced, what challenges arose, and how were they overcome?
  Response: Rapid expansion to 65 ports and diversification (bulk/tankers, biofuels) drove ~10% volume growth and reduced losses despite geopolitical and price volatility.

• Question from Ryan Chen ([indiscernible] Financial): What drove the 38.8% YOY reduction in net loss, and how sustainable are these measures?
  Response: Scale from prior network/customer investments and a 17% OpEx cut led the improvement; management expects continued efficiencies and growth, especially in sustainable fuels.

• Question from Marcus Wong (Hang Seng Bank): How will CBL capture demand from rerouted Euro-Asia and intra-Asia trade flows?
  Response: Its extensive Asia Pacific/European network is positioned to service rerouted voyages, already translating into higher volumes.

• Question from Pauline Lau (Citibank): How will CBL maintain or improve gross margins as the network and customer base expand?
  Response: Focus on higher-margin sustainable fuels (biofuels, methanol, LNG), scale economies, and cost-plus pricing; margins could further improve as trade/tariffs normalize.

• Question from Alvin Cheung (Prudential Brokerage Limited): How will CBL grow non-container sales (now 36.9%) while maintaining container-liner relationships?
  Response: Continue diversifying into bulk/tankers using flexible network while retaining 9 of top 12 container liners; customer concentration is declining.

• Question from Alan Wu (Phillip Securities): What drove the 17% OpEx decrease, and how does it reflect long-term expense management?
  Response: Nonrecurring setup costs rolled off and operations were streamlined via automation/IT; ongoing process optimization will sustain cost discipline.

• Question from Nelson Lee (ICBCI): Any 2H25 expansion plans and 5-year/2030 business model outlook?
  Response: Pursue network growth (APAC/emerging markets), expand sustainable fuels (biofuels, methanol, LNG), secure financing, and consider vertical/horizontal integrations to become a full-fledged bunkering facilitator.

• Question from Alan Lau (Jefferies): What global industry trends do you see and how are you preparing to capitalize?
  Response: With sustainability/regulatory tailwinds and rerouted trade, CBL is scaling its 65-port network, deepening biofuel partnerships/certifications, and enhancing risk/IT systems to capture green fuel and regional demand.

• Question from Tony Fei (BOCI): Impact of the U.S. reciprocal tariffs effective August 7 on CBL and the bunkering industry?
  Response: Direct impact is minimal (no U.S. port operations); tariffs are redirecting cargo to intra-Asia/Europe, lifting demand along CBL’s corridors; company is monitoring and leveraging its network.