Earnings hit by higher costs in securing jet fuel supply after escalation of Middle East conflict
[SINGAPORE] China Aviation Oil (CAO) on Thursday (Aug 13) posted a 17.8 per cent year-on-year drop in net profit for the first half ended Jun 30 to US$41.1 million, down from US$50 million.
The decline in earnings was primarily driven by higher costs in securing jet fuel supply following the escalation of conflict in the Middle East. Inventory impairment losses from falling oil prices in Asia and the US West Coast in May and June also drove the drop, said the mainboard-listed group.
Shares of China Aviation Oil reacted accordingly and fell as much as 13.7 per cent to S$1.51 by 1.22 pm.
Revenue for the half year fell 8.8 per cent year on year to US$7.8 billion from US$8.6 billion, reflecting lower total business volume, even as higher oil prices provided a partial offset. Gross profit slumped 83.8 per cent to US$4.9 million from US$30.4 million.
Total supply and trading volume sank 46.3 per cent to 7.4 million tonnes in H1 2026, down from 13.8 million tonnes a year ago. This was largely due to a sharp 98.9 per cent drop in trading volume for other oil products to 0.07 million tonnes, after CAO ceased trading in crude oil from Jan 1 this year.
Middle distillates volume eased slightly by 0.8 per cent to 7.3 million tonnes, with jet fuel supply and trading volume down 0.5 per cent to 7.3 million tonnes.
Providing a boost to earnings was a 67.3 per cent surge in share of results from associates to US$45.9 million, up from US$27.4 million in H1 2025. This was led by Shanghai Pudong International Airport Aviation Fuel Supply Company, whose contribution jumped 76 per cent to US$44.9 million on higher refuelling volumes and oil prices.
Earnings per share stood at US$0.0478 a share for the period, down from US$0.0582 a share previously. No interim dividend was declared, unchanged from the year-ago period.
The group maintained a healthy financial position with zero net interest-bearing debt. Net asset value per share rose to US$1.2669 as at Jun 30, from US$1.2528 as at Dec 31, 2025.
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Outlook
CAO chief executive Lin Yi noted that although escalating geopolitical tensions and oil market risks continue to challenge the sector, the group’s underlying fundamentals remain resilient.
“Looking ahead, the situation in the Middle East remains fluid. However, capitalising on our operational resilience… the CAO Group is positioned to expand our jet fuel trading and supply network,” he said.
Executive chairman Xu Guohong added that the company remains “cautiously optimistic” about its outlook, supported by the recovery in international travel in China and the global aviation sector.
He also highlighted the completion of the restructuring of parent firm China National Aviation Fuel Group with China Petrochemical Corporation (Sinopec Group) in July, which makes Sinopec an indirect controlling shareholder with a 51.31 per cent stake.
Being part of Sinopec will provide CAO with “broader strategic opportunities, including enhanced access to upstream refinery and supply resources”, Xu said.
