MISC has reported a near 30% increase in second quarter net profit as the Malaysian tanker and LNG owner was able to bring down costs.
Net income was MYR 419.1m ($100m) versus the MYR 347m achieved in the same period in 2018.
Revenue was largely unchanged at MYR 2.1bn, but the company reported a near 7% year-on-year decline in costs to MYR 1.5bn.
At its LNG arm revenue was up 10.4% to MYR 657.9m due to a larger fleet following the acquisition of two LNG carriers in December 2018 and January 2019.
In contrast the tanker arm saw revenue inch 1.6% lower to MYR 992.5m as the company disposed of seven aframaxes and redelivered two chartered-in aframaxes.
However, the reduction in revenue was cushioned by higher freight rates achieved in the current quarter.
“In the first half of the year, petroleum tanker earnings were considerably better than in previous year, due to market rebalancing after a high level of scrapping in 2018, supported by long-haul crude trade growth,” MISC said.
“However, continued OPEC-led oil production cuts, geopolitical risk in Iran and the recent tanker attacks in the Straits of Hormuz may affect shipping volumes in the shorter term. “Nonetheless, the latter half of 2019 is expected to pick up for the tanker market as ship supply will be crimped by vessels taken out of service for scrubber retrofitting, and tanker markets would be boosted by increasing US oil exports and increase in tonne-mile demand.”
MISC said the LNG shipping spot market has been experiencing a seasonal decline in the first half of 2019, but rates have firmed up in recent months and are expected to pick up gradually on the back of peak summer demand in Asia and Europe.
“Nevertheless, the operating income of MISC’s LNG business unit continues to be underwritten by the existing portfolio of long term charters that are in place,” it said.
