World Fuel Services 2015 Annual Report Download - page 28

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23
Corporate expenses are allocated to each segment based on usage, where possible, or on other factors according to the
nature of the activity. We evaluate and manage our business segments using the performance measurement of income
from operations.
The results of operations include the results of (i) Pester commencing on September 1, 2015, (ii) Watson Petroleum
commencing on March 7, 2014 and (iii) Colt commencing on July 29, 2014; their respective acquisition dates.
Selected financial information with respect to our business segments is provided in Note 11 to the accompanying
consolidated financial statements included in this 2015 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. 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 and gas prices. 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 further deterioration in the world economy,
declines in 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 2015 10-K Report.
2015 compared to 2014
Revenue. Our revenue for 2015 was $30.4 billion, a decrease of $13.0 billion, or 30.0%, as compared to 2014. Our revenue
during these periods was attributable to the following segments (in millions):
2015
2014
$ Change
Aviation segment $ 11,738.2 $ 17,268.8 $ (5,530.6)
Marine segment 9,367.2 13,843.3 (4,476.1)
Land segment 9,274.3 12,274.3 (3,000.0)
Total $ 30,379.7 $ 43,386.4 $ (13,006.7)
Our aviation segment revenue for 2015 was $11.7 billion, a decrease of $5.5 billion, or 32.0% as compared to 2014. Of the
decrease in aviation segment revenue, $7.4 billion was due to a decrease in the average price per gallon sold as a result of
lower average jet fuel prices in 2015 as compared to 2014, which was partially offset by $1.9 billion principally due to increased
volume attributable to new and existing customers.
Our marine segment revenue for 2015 was $9.4 billion, a decrease of $4.5 billion, or 32.3% as compared to 2014. Of the
decrease in marine segment revenue, $8.2 billion was due to a decrease in the average price per metric ton sold as a result
of lower average marine fuel prices in 2015 as compared to 2014, which was partially offset by $3.7 billion due to increased
volume attributable to new and existing customers.
Our land segment revenue for 2015 was $9.3 billion, a decrease of $3.0 billion, or 24.4%, as compared to 2014. Of the
decrease in land segment revenue, $5.0 billion was due to a decrease in the average price per gallon sold as a result of
lower average land fuel prices in 2015 as compared to 2014, which was partially offset by $1.6 billion due to increased
volume attributable to new and existing customers and $0.4 billion due to revenue from acquired businesses.