MISC Berhad has seen the financial performance at its tanker arm crash by almost 90% in the first quarter on the back of the weak tanker market.
Malaysia’s top shipowner said its petroleum and product shipping arm achieved an operating profit of just MYR 34.4m ($8.3m), down from the MYR 336.5m seen a year earlier.
Revenue for the division, which controls a fleet of more than 80 tankers, came in at MYR 795.1m. That is a decline of 35.3% on the MYR 1.2bn seen in the first three months of 2020.
“The crude tanker market had a sluggish start to 2021, with rates still suffering from the continuing oil production cuts by the Opec+ alliance,” MISC said.
“Although tanker rates for smaller vessels are rebounding, some of the larger tankers continue to record low freight earnings.”
On the supply side, MISC said demolition has not picked up pace despite the disappointing freight rates during the quarter.
“In the short term, the tanker market outlook remains challenging especially in the larger tanker segment, although the gradual return of Opec+ oil production to the market across May to July 2021 is likely to provide some crude tanker market upside,” the shipowner added.
Gas arm
In contrast to the tanker division, MISC’s gas shipping arm saw its operating profit decline just 16.8% year on year to MYR 300.9m, while revenue was 1.5% down on a year ago at MYR 685.7m.
MISC said LNG carrier spot charter rates fell sharply in February and March 2021 after hitting historically high levels in January.
“The decline in charter rates was broadly due to weakening global spot trade as seasonal winter demand in Asia eased, a situation aggravated by a large wave of newbuild LNG carrier deliveries,” the company said.
Furthermore, more US spot cargoes were destined to Europe instead of Asia, meaning less vessel capacity was required.
“If this situation persists, spot charter rates could potentially fall further in the near term but there could be some potential upside if countries start stockpiling earlier in the summer for the winter months,” MISC said.
Overall, MISC reported a bottom-line profit of nearly MYR 396m, reversing a loss of nearly MYR 1.15bn in the first quarter of 2020 when the company's logged a large provision for litigation in its books.
TradeWinds recently reported that MISC had missed out on a major long-term charter from parent company Petronas.
The energy giant reportedly selected South Korean shipowner Hyundai LNG Shipping to build LNG carriers it requires to lift its planned volumes from liquefaction project LNG Canada.
