China Aviation Oil (Singapore) Corporation Ltd. (CAO), the largest physical jet fuel trader in the Asia-Pacific region, reported on Thursday a net profit of $13.4 million in the second quarter this year, down 6.9 percent year on year.

The company said the decrease in net profit was mainly due to lower profit contributions from associated companies.

Despite a record net profit of $21.5 million in the first quarter, the company achieved a net profit of $34.9 million in the first half of this year, which was largely unchanged from $34.8 million from the same period last year.

Profit from the Shanghai Pudong International Airport Aviation Fuel Supply Company, a key associated company, stood at $5.3 million in the second quarter, a large fall of 42.3 percent on year. The associated company's margins were "negatively impacted by the decline in sales revenue vis-a-vis cost of sales as jet fuel prices trended lower."

But the company's supply and trading business of jet fuel and other oil products performed relatively better. Its gross profit for the first half year increased 42.8 percent to $33.8 million. After total expenses were excluded, the company's operating profit increased 50.9 percent in the six months to $22.8 million, mainly attributable to significantly higher gross profit derived from higher gains from supply and trading activities.

Jet fuel supply and trading volume in the second quarter fell 4. 9 percent on year to 2.7 million tons, mainly due to lower trading volume. The supply and trading volume of other oil products, on the other hand, jumped 56.7 percent to 1.4 million tons as trading activities increased across the board.

Meng Fanqiu, chief executive officer of the company, said that the strong performance of the company's supply and trading business of jet fuel and other oil products has helped to mitigate the impact of decrease in profit contribution from its associated companies.

"CAO's ability to sustain profitability despite challenging market conditions demonstrates the resilience of its business model and the capability of its trading team," added Meng.

He said the company's core jet fuel supply and trading business sustained growth in profitability in the first half year, driven by China's stable growth in the demand for imported jet fuel and higher gains from optimization and trading activities.

"Amidst China's robust demand for petrochemical products, our petrochemicals supply and trading book also continued to achieve strong profit growth. Gross profit of our gasoil and fuel oil businesses also increased significantly. We are pleased to note that CAO's portfolio of other oil products contributed significantly to the group's gross profit in H1," Meng added.

CAO is the sole supplier of imported jet fuel to the civil aviation industry of China. It also supplies jet fuel to airports outside the Chinese mainland, in markets such as the Asia Pacific, Europe, North America and the Middle East. It also engages in international trading of jet fuel and other oil products.