World Fuel Services 2014 Annual Report Download - page 29

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24
The financial position, results of operations and cash flows of (i) Watson Petroleum have been included in our land segment
commencing on March 7, 2014, its acquisition date and (ii) Colt have been included in our aviation segment commencing
on July 29, 2014, its acquisition date.
Selected financial information with respect to our business segments is provided in Note 11 to the accompanying
consolidated financial statements included in this 2014 10-K Report.
Results of Operations
In our aviation and land segments, we primarily purchase and resell fuel and other products, and we do not act as brokers.
Profit from our aviation and land segments is primarily determined by the volume and the gross profit achieved on fuel
resales and a percentage of card payment and processing revenue. In our marine segment, we primarily purchase and
resell fuel and also act as brokers for others. Profit from our marine segment is determined primarily by the volume and
gross profit achieved on fuel resales and by the volume and commission rate of the brokering business. Our profitability in
our segments also depends on our operating expenses, which may be significantly affected to the extent that we are required
to provide for potential bad debt.
Our revenue and cost of revenue are significantly impacted by world oil prices, as evidenced in part by our revenue and
cost of revenue fluctuations in previous fiscal years, while our gross profit is not necessarily impacted by changes in world
oil prices. However, significant movements in fuel prices during any given financial period can have a significant impact on
our gross profit, either positively or negatively depending on the direction, volatility and timing of such price movements.
We may experience decreases in future sales volumes and margins as a result of the ongoing deterioration in the world
economy, the decline of the transportation industry, natural disasters and continued conflicts and instability in the Middle
East, Asia and Latin America, as well as potential future terrorist activities and possible military retaliation. In addition,
because fuel costs represent a significant part of our customers’ operating expenses, volatile and/or high fuel prices can
adversely affect our customers’ businesses, and, consequently, the demand for our services and our results of operations.
Our hedging activities may not be effective to mitigate volatile fuel prices and may expose us to counterparty risk. See
“Item 1A – Risk Factors” of this 2014 10-K Report.
2014 compared to 2013
Revenue. Our revenue for 2014 was $43.4 billion, an increase of $1.8 billion, or 4.4%, as compared to 2013. Our revenue
during these periods was attributable to the following segments (in thousands):
2014 2013 $ Change
Aviation segment $ 17,268,834 $ 16,087,611 $ 1,181,223
Marine segment 13,843,307 14,790,342 (947,035)
Land segment 12,274,248 10,683,994 1,590,254
Total $ 43,386,389 $ 41,561,947 $ 1,824,442
Our aviation segment revenue for 2014 was $17.3 billion, an increase of $1.2 billion, or 7.3% as compared to 2013. Of the
increase in aviation segment revenue, $2.5 billion was due to increased volume attributable to new and existing customers,
which was partially offset by $1.3 billion due to a decrease in the average price per gallon sold as a result of lower average
jet fuel prices in 2014 as compared to 2013.
Our marine segment revenue for 2014 was $13.8 billion, a decrease of $0.9 billion, or 6.4% as compared to 2013. Of the
decrease in marine segment revenue, $0.5 billion was due to decreased volume and $0.4 billion was due to a decrease in
the average price per metric ton sold in 2014 as compared to 2013.
Our land segment revenue for 2014 was $12.3 billion, an increase of $1.6 billion, or 14.9%, as compared to 2013. Of the
increase in land segment revenue, $2.1 billion was due to revenue from acquired businesses and $0.6 billion was due to
increased volume attributable to new and existing customers, which was partially offset by $1.1 billion due to a decrease in
the average price per gallon sold as a result of lower average land fuel prices in 2014 as compared to 2013.