Malaysian shipping giant MISC sees positive outlooks for both LNG and tanker shipping markets this year.
Reporting its second quarter results on Thursday, the shipowner that in the near term, LNG shipping prospects remain positive due to the rebounding of demand prompted by lower prices, restocking for winter requirements and depletion of inventories in the summer given frequent heat waves.
MISC, which is controlled by state energy company Petronas, said its gas assets and solutions segment will continue to pursue available growth opportunities while its operating income remains solid, supported by its current portfolio of long-term charters.
The company highlighted that charter rates for mid-sized tankers softened in June 2023 due to lower activities in the UK Coast, Mediterranean and Black Sea region.
But it said the overall tanker market outlook remains “positive” citing new trade patterns supporting tonne-mile demand, despite the recent short-term production curbs by OPEC+.
“Based on the current environment, the petroleum & product shipping segment has been continuing to improve the quality of its income and balance sheet through its niche shuttle tanker business and rejuvenation of its fleet with dual-fueled tankers,” the company said.
It also expects demand for FPSOs [floating production storage and offloading units] to stay firm with an anticipated increase in project awards over the next few years, particularly in the South American region.
MISC turned around its figures in the second quarter logging a net pre-tax profit of MYR 339.2m ($73m) compared to a net loss of MYR 400,000 in the corresponding three months of 2022.
Revenue climbed to MYR 3.6bn from MYR 3.2bn in the same period a year earlier.
Half year figures were also improved with net pre-tax profit of MYR 966.8m up from MYR 386.2m in same six months of 2022 and revenue of MYR 6.7bn compared to MYR 6.1bn.
The company attributed the rise to improved freight rates in the petroleum and product shipping segment which boosted operating profit.
MISC said the increase in its marine & heavy engineering segment’s revenue was due to higher revenue from ongoing Heavy Engineering projects. But overall this sector recorded an operating loss for the quarter due to additional cost provisions following the revision of schedules for ongoing projects.
The Group said it recorded higher cash flows for the quarter on the back of improved operating performance and the receipt of charter hire prepayment for two floating storage units.
But it said the revenue was offset by slow progress on the conversion of a floating production storage and offloading unit and returns from its offshore business segment.
“For the time being, the offshore business segment will remain focused on executing the project in hand and undertake mitigation measures to minimise cost and schedule pressures, while selectively pursuing new opportunities in the market,” the company said.
For its marine & heavy engineering segment, the company said that while market conditions support multiple opportunities ongoing project execution remains challenging due to raw material price escalation and global supply chain disruption. It said this resulted in additional costs and schedule impact, which the recovery will be pursued from clients.
MISC is also anticipating an increase in demand for dry-docking activities from a rise in seaborne trade. But it said its marine sub-segment is also expected to remain challenging given the stiff competition from Chinese shipyards.
“The marine & heavy engineering segment will continue exploring opportunities in the domestic and international markets with increased emphasis on decarbonisation and renewable energy,” it said.