MISC sees stiff competition in industry
“Higher oil prices have encouraged the increase in global upstream capex spending as the world economy continues to recover despite impacts of inflation.” MISC Bhd
PETALING JAYA: MISC Bhd cautioned that more vessel owners could defer dry-docking as soaring gas prices and robust liquified natural gas (LNG) demand are set to lead the growth in the LNG trade.
Reduced dry-docking activities, referring to repairs or when a ship is taken to the service yard, would in turn create stiffer competition among shipyards, including MISC’S marine business segment.
“Given this backdrop, the marine sub-segment expects its business to remain challenging,” it said in a filing with Bursa Malaysia yesterday.
Meanwhile, for the heavy engineering subsegment, MISC said it remains cautiously optimistic on the outlook for the remainder of the year in view of prolonged supply chain disruptions and high steel prices.
This is despite the increase in global upstream capital expenditure (capex) spending.
“Higher oil prices have encouraged the increase in global upstream capex spending as the world economy continues to recover despite impacts of inflation and supply chain disruptions.
“The demand for floating production, storage and offloading (FPSO) units is positive with the increase in project sanctions around the world
particularly from Brazil, being the highest FPSO demand centre, followed by West Africa.
“Meanwhile, the offshore business segment will remain focused on executing the project in hand while undertaking mitigation measures to minimise cost and schedule pressures,” the group added.
Yesterday, MISC reported that its net profit more than doubled to Rm820.6mil in the third quarter ended Sept 30 on the back of stronger turnover. In the previous corresponding quarter, MISC recorded a net profit of Rm401mil.
Meanwhile, the revenue of the recently-concluded third quarter rose by 34.26% year-onyear (y-o-y) to Rm3.61bil. The stronger revenue was due to increased contributions from all segments.
“The petroleum and product shipping segment reported higher revenue mainly from higher freight rates in the mid-sized tanker segment while the offshore business segment recorded an increase in revenue following improved project progress in this quarter for conversion of a FPSO,” MISC said.
The group’s operating profit also improved due mainly to one-off compensation for a contract renegotiation and higher freight rates in the petroleum and product shipping segment in the current quarter.
“The marine and heavy engineering segment also reported an increase in operating profit mainly from the recovery of Covid-19 claims and higher dry-docking activities in the current quarter,” it added.
As a result of improved profits, MISC’S earnings per share rose to 18.40 sen. A dividend of seven sen was announced for the quarter.
Cumulatively, for the first nine months ended Sept 30, MISC’S net profit contracted by almost 14% y-o-y to Rm1.18bil, stemming from higher impairment of ships, higher finance costs as well as lower share of profit from joint ventures. Revenue, however, rose by 27.78% y-o-y to Rm9.69bil.
MISC president and chief executive officer Captain Rajalingam Subramaniam said in a statement that the group’s robust financial standing places it on the progressive path to deliver sustainable value to its stakeholders.
“At the same time, we will be steering our mid to long-term ambitions to pursue new business opportunities as we advance to the net-zero future with greater synergy and collaboration with our stakeholders and partners,” added Rajalingam.
Looking ahead, MISC aims to replenish its order book, including by venturing into carbon capture and storage as well as renewables.
It will also continue to focus on cost management, improving project execution and project delivery through prudent investment in technology, people, digitalisation and automation.