Another tough year ahead - MISC

May 31 2019


MISC has announced a jump of 64% in net profit for the first quarter of this year.

Group revenue for the quarter of RM2,277.7 mill was 12.7% higher than the corresponding quarter’s revenue of RM2,020.8 mill.

This revenue increase was contributed by improved freight rates recorded in 1Q19 for Aframaxes, VLCCs and Suezmaxes in the petroleum segment.

In addition, Heavy Engineering revenue increased resulting from higher completion progress of ongoing projects. Higher number of operating vessels in the LNG segment also attributed to the higher revenue in the current quarter.

Group operating profit of RM591.9 mill was higher than the corresponding quarter’s operating profit of RM383.4 mill.. Additional FSU charter rates in the LNG segment also contributed to the higher operating profit in 1Q19.

The Offshore segment recorded lower operating profit, due to the inclusion of construction gain from ‘FSO Benchamas 2’ in the corresponding quarter’s results.

Group profit before tax of RM542 mill was higher than the corresponding quarter’s profit before tax of RM319.2 mill, following the higher operating profit, gain on acquisition of a business and on a ship disposal.

However, this increase was offset with higher finance costs due to the increase in borrowings.

Looking ahead, petroleum tanker earnings are expected to continue to trend downward in the first half of this year on the back of persistent tonnage oversupply, seasonal factors and oil supply cuts.

While 2019 as a whole is expected to be a better year for the tanker sector than 2018, continued OPEC-led oil production cuts and the end of Iran oil waivers by the US are a concern, as these may affect shipping volumes.

Over the longer term, growth in tonne/miles, driven by higher exports from the Atlantic region to Asia, suggests a more robust outlook for charter rates.

In the second half of 2019, tanker deliveries are expected to slow and new liquefaction capacity will likely help keep rates afloat.

The offshore segment continues to be supported by healthy activities in oil and gas exploration and production. The Heavy Engineering segment is expecting to see more drydocking activities at its yard in view of encouraging growth in global sea trade.

MISC’s President/Group CEO, Yee Yang Chien, said “Global energy volatility would linger for yet a while and we have been taking the necessary steps to continuously shape and future-proof our business. Despite the prevailing challenges, MISC once again proved its resilience by turning in commendable financial and operational performances across our business segments.

“We expect no less than another challenging year ahead. Nonetheless, we are confident of the growth opportunities available in the global energy industry and we believe we have the resources and financial stability to support our long-term efforts in strengthening our position in the market as well as filling the growth pipeline with a right mix of new projects.

“As we strive to fulfill our aspiration to consistently provide better energy related maritime solutions and services, we remain optimistic on the long-term prospects and possibilities that lie ahead that drives our ambition of moving energy to build a better world.” he concluded.

 



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May 2019

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