MISC Reaps Fruit from LNG Fleet Additions

Image Courtesy: MISC

Malaysian shipping group MISC Berhad (MISC) has posted a net profit of RM 680.5 million (USD 160.8 million) for the third quarter of 2017, more than quadrupling last year’s equivalent of RM 134.2 million.

Group revenue for the quarter came at RM 2,315.8 million, a 1.0% higher than the last year’s corresponding quarter’s revenue of RM2,292.8 million. The increase in revenue was contributed to the lease commencement of three new LNG vessels delivered in October 2016, January 2017 and August 2017.

The company’s offshore segment also contributed to the increase with the favorable adjudication decision on Gumusut-Kakap Semi-Floating Production System (L) Limited (GKL) variation works and construction revenue from Floating, Storage and Offloading Vessel (FSO) Benchamas 2 that commenced construction in January 2017, MISC said.

The revenue growth was, however, dampened by the lower earning days and freight rates reported by MISC’s petroleum arm as well as lower revenue from heavy engineering segment as most on-going projects are nearing completion.

“Petroleum shipping demand continues to be affected by global production cuts in response to high crude inventory levels and low oil prices. This has also been exacerbated by the delivery of new tankers during the year. Nonetheless, seasonal demand during peak winter months will end the year on a firmer note for the petroleum shipping sector,” MISC said.

Group revenue for the nine-month period stood at RM 7,603.2 million, 7.4% higher than last year’s equivalent.

MISC’s profit before tax for the 9 months reached RM 1,961.5 million, down by 15.1% year-on-year.

On the LNG shipping front, spot charter rates remain sluggish as a result of the tonnage oversupply driven by higher vessel deliveries and older vessels coming off charter, the company noted. However, spot charter rates are expected to pick up as countries start building up inventories to meet the winter heating demand.

MISC said that long term charters in its LNG shipping business along with long-term contracts secured by its offshore business division will continue to support the financial performance of the group.

In July, MISC took delivery of its new LNG Carrier, Seri Cempaka from Hyundai Heavy Industries. The 150,200 CBM Liquefied Natural Gas (LNG) carrier is the third in a series of five MOSS-Type LNG carriers ordered at HHI.

In addition, Seri Camellia has joined MISC’s LNG fleet as the 27th active LNG carrier.

Meanwhile, in its heavy engineering business segment, the group is working on cost management and improving operational efficiency to combat the challenging environment.

“Replenishment of orderbook from the marine segment and offshore services is progressing and remains a priority. While the segment has successfully secured several offshore fabrication projects during the period, the majority of the contribution will only be realised in 2018 and beyond,” MISC said.

“MISC will continue to pursue sustainable growth guided by MISC2020, our 5-year masterplan, with emphasis on advancing the growth of our core business segments,” MISC’s CEO Yee Yang Chien said.

“We continue to accomplish notable milestones during this quarter and the recent months which includes MISC becoming a Strategic Partner of the Global Maritime Forum, a platform that is dedicated to unleashing the potential of the global maritime industry and is committed to shaping the future of global seaborne trade. MISC was recently acknowledged as the Tanker Operator of the Year at the Lloyd’s List Asia Pacific Awards 2017, highly regarded as a global mark of recognition within the shipping industry.”

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