Crude tanker freight rates have recovered sharply since 3Q18, as oil production by Opec and Russia have risen significantly since May 2018, ahead of the unilateral US sanctions on Iran.
KUALA LUMPUR: MISC Bhd
expects another challenging year ahead as weakness in the petroleum tanker market persists despite ending 2018 on a firmer note.
Announcing its results for the fourth quarter ended Dec 31, 2018, the group said operating profit came in at RM381.4mil, which was 39.3% or RM246.9mil lower than the 2017 quarter's operating profit of RM628.3mil.
Group revenue was weaker by 3.1% to RM2.39bil from RM2.47bil in the same quarter last year.
Net profit however quadrupled to RM338.7mil from RM68.2mil in the previous corresponding quarter due to a RM553.9mil impairment charge on shipping assets incurred in the comparative quarter.
In its outlook for 2019, MISC said the recently announced Opec-led production cuts as well as geopolitical uncertainty is expected to weigh on demand for seaborne oil.
While the sustainability of LNG spot rates as seen in late 2018 remain uncertain, MISC's long-term charters will maintain a steady performance for MISC's LNG shipping unit over the current financial year, it said.
In the offshore segment, MISC will be actively pursuing an increasing number of floating production system contract awards in the next few year.
"The two new assets added in 2018 will provide a source of income growth and support the financial performance for the unit in 2019," it added.
Meanwhile, the heavy engineering segment is not expecting further deferment by ship owners for dry-docking activities and will pursue a number of long-term offshore fabrication frame agreements to contribute positively to revenue in 2019 and beyond.
Over four quarters in the financial year ended Dec 31,2018, MISC's net profit fell 33.8% to RM1.31bil while operating profit dropped 45.79% to RM1.47bil from RM2.71bil previously.
Revenue was RM8.78bil, a decrease of 12.79% from RM10.07bil in 2017.
The group declared an interim dividend of nine sen per share as compared to 30 sen per share in the previous comparative quarter.
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