UPDATE 1-Marine fuel firm Aegean's shares sink on weak results

Thu Nov 11, 2010 9:55am EST

* Shares fall nearly 40 percent

* Aegean Q3 adj EPS less than half of estimates

* Weak bunker fuel sales margins hurt results (Adds analyst comment, conf call details, updates shares)

By Adveith Nair

BANGALORE, Nov 11 (Reuters) - Investors wiped out over a third of the market value of Greek Marine fuel logistics company Aegean Marine Petroleum Network (ANW.N) on Thursday, a day after the company posted weak quarterly results.

Piraeus, Greece-based Aegean reported a third-quarter adjusted profit of 16 cents a share, less than half of analysts' view. Analysts were expecting 35 cents a share. [ID:nSGE6A90P9]

Shares of the company, which markets and supplies refined marine fuel and lubricants to ships in port and at sea, were down nearly 40 percent at $9.65, their lowest levels in nearly two years. The stock was the top percentage loser on the New York Stock Exchange.

"The miss was driven by lower margins on bunker fuel sales as very slow tanker traffic heated up competition," Dahlman Rose analyst Omar Nokta said.

On a conference call with analysts, company executives said increased competition across Aegean's geographic portfolio and oversupply, amid a weak tanker market, hurt margins.

Rates for most vessel classes hit year lows during the quarter, with rates for very large crude carriers, suezmaxes and aframaxes falling by more than half sequentially.

Nokta said Aegean reported a blended average spread on bunker fuel sales of $18.80/ton, below second-quarter spreads of $22.50/ton and his estimate of $22.30/ton.

Gross spread per metric ton of marine fuel is the margin the company generates per metric ton of marine fuel sold.

BB&T Capital Markets analyst Kevin Sterling said margins were hurt as tanker companies went bargain hunting for the lowest fuel prices.

"We expect spreads to remain under pressure until shipping rates rebound, in particular tanker rates," Sterling said. "For 2011, we are modeling a gross spread of $18.95/ton." (Reporting by Adveith Nair in Bangalore; Editing by Vyas Mohan)

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