MISC's 1Q net profit falls to RM376.4mil on higher finance costs, lower JV profits


KUALA LUMPUR: MISC Bhd recorded a net profit of RM376.4mil in the first quarter ended March 31, 2022, a 12.42% decrease from RM429.8mil in the same quarter last year on higher finance costs coupled with lower share of profit from joint venture entities.

In a statement, the shipping and maritime services group said operating profit for the quarter was 11.4% higher at RM516.9mil compared with the previous corresponding quarter, owing to improved contributions from its gas assets and solutions and engineering segments.

The board of directors declared a dividend of seven sen per share for shareholders on the register on June 10, 2022, and payable on June 22, 2022.

For the three-month period, group revenue was RM2.87bil, 12.9% higher than RM2.54bil in 1Q21.

The group said cash flow generated from operating activities came to RM461.6mil, which included cash payments of RM687.5mil for the construction of an FPSO in the current quarter.

Excluding the said payments, the group generated an operating cash flow of RM1.15bil, which was 31.5% higher year-on-year, mainly due to higher operating performance as well as improved collection of receivables.

"MISC’s strong first quarter financial results for 2022 is a testament to the disciplined execution of our strategies, our resilience and ability to sustain the momentum of growth across the group.

"This sets us firmly on the progressive path towards ensuring the successful execution and delivery of our ongoing projects as we continue to navigate the challenging macroeconomic environment," said MISC president and group CEO Datuk Yee Yang Chien in a statement.

He highlighted that the group's longer-term strategy is defined by MISC2050, which focuses on identifying new business opportunities.

"While our current portfolio of long-term contracts provide stability to drive our growth, through MISC 2050, we are committed to strategically define our role in a future that is being shaped by the global energy transition and the shift towards circular economy," he said.

On prospects, Yee said the operating income of the gas assets and solutions segment remains stable due to its long-term charters and pursuit of growth opportunities.

Meanwhile, the petroleum shipping market is likely to be supported by changes in crude oil trade patterns due to the ongoing Russia-Ukraine conflict, which has resulted in shifts to longer-haul routes.

"However, there remain notable downside risks from trends in the global economy particularly from lockdowns in China which will further undermine Chinese crude imports," Yee added.

Yee expects the upstream oil and gas sector to continue to be positive as oil prices stay elevated and with increasing global demand for oil amid a gradual return to more normal activity levels.

Consequently, demand for FPSOs is expected to remain healthy despite lingering economic uncertainty, lockdowns in parts of China and supply chain concerns.

The group is also vigilant on the outlook of its heavy engineering sub-segment, as the timing of oil majors’ capital spending remains uncertain with high prevailing steel prices.

Meanwhile, the marine sub-segment is expected to gradually recover in 2022 with the reopening of international borders. As the entry of technical experts is no longer restrictive, there will be an increased likelihood of projects secured from foreign clients.

"Additionally, the reimposition of lockdowns in China would be advantageous as clients seek dry-docking alternatives elsewhere," said Yee.

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