MISC is pleased to announce its financial results for the third quarter ended 30 September 2023
- Group revenue for the quarter ended 30 September 2023 was lower than the corresponding quarter ended 30 September 2022 while the Group revenue for the period ended 30 September 2023 was higher than the period ended 30 September 2022
Group operating profit for the quarter ended 30 September 2023 was lower than the corresponding quarter ended 30 September 2022 while the Group operating profit for the period ended 30 September 2023 was comparable to the corresponding period ended 30 September 2022.
Group profit before tax for the quarter ended 30 September 2023 was lower than the corresponding quarter ended 30 September 2022 while the Group profit before tax for the period ended 30 September 2023 was higher than the corresponding period ended 30 September 2022.
- Group cash flows generated from operating activities for the period ended 30 September 2023 was higher than the corresponding period ended 30 September 2022.
Group Revenue, Operating Profit and Profit Before Tax for the Quarter Ended 30 September 2023
Group revenue of RM3,365.1 million was RM249.0 million or 6.9% lower than the quarter ended 30 September 2022 (“corresponding quarter”) revenue of RM3,614.1 million, mainly due to lower recognition of revenue in the Offshore Business segment from the conversion of a Floating, Production, Storage and Offloading unit (“FPSO”) following lower project progress in the current quarter. The decrease in Group’s revenue was however offset by higher revenue recognition from new and ongoing projects in the Marine & Heavy Engineering segment.
Group operating profit for the quarter ended 30 September 2023 of RM649.9 million was RM380.0 million or 36.9% lower than the corresponding quarter's profit of RM1,029.9 million mainly due to a one-off compensation for a contract renegotiation in the corresponding quarter in the Petroleum & Product Shipping segment coupled with lower profit in the Offshore Business segment from lower construction gain from the FPSO conversion and additional cost provisions recognised in the current quarter. The Marine & Heavy Engineering segment recorded an operating loss in the current quarter under review on the back of additional costs provisions from the price escalation impact on ongoing projects in the current quarter.
The Group reported a profit before tax of RM464.6 million was RM373.2 million or 44.5% lower than the corresponding quarter’s profit before tax of RM837.8 million mainly due to lower operating profit mentioned above.
Group Revenue, Operating Profit, Profit Before Tax and Cash Flows from Operating Activities for the 9 Months Period Ended 30 September 2023
Group revenue of RM9,993.4 million was RM299.4 million or 3.1% higher than the revenue for the 9-months period ended 30 September 2022 (“corresponding period”) of RM9,694.0 million mainly contributed by higher revenue from new and ongoing projects in the Marine & Heavy Engineering segment and improved freight rates in the Petroleum & Product Shipping segment. The increase in Group’s revenue was, however, offset by lower revenue recognition from the conversion of an FPSO following lower project progress in the current period.
Group operating profit of RM2,006.7 million was comparable to the corresponding period’s profit of RM2,007.7 million.
The Group reported a profit before tax of RM1,431.4 million was RM207.4 million or 16.9% higher than the corresponding period’s profit before tax of RM1,224.0 million mainly due to lower impairment of non-current assets in the current period.
The Group recorded cash flows generated from operating activities of RM4,317.3 million for the period ended 30 September 2023 which was higher by RM2,525.0 million or more than 100% compared to RM1,792.3 million in the corresponding period, mainly due to receipt of charter hire prepayment for two Floating Storage Units. Additionally, the Group recorded lower payments for cost relating to turnkey activities for the conversion of a FPSO amounting to RM1,233.9 million in the current period compared to payments of RM2,157.0 million in the corresponding period. Excluding the payments for the above turnkey activities, the Group’s adjusted net cash generated from operating activities of RM5,551.2 million was higher by RM1,601.9 million or 40.6% compared to RM3,949.3 million in the corresponding period.
Spot rates continued to strengthen in the LNG shipping market in the third quarter of 2023, driven by rerouting of shipments through longer routes due to the geopolitical situation, and seasonal demand. In the near term, prospects remain positive backed by growing global LNG demand and additional LNG infrastructure investments which further supports LNG growth. Based on this, the Gas Assets and Solutions segment will continue to pursue available growth opportunities while its operating income is expected to remain stable, underwritten by its portfolio of long-term charters.
The petroleum shipping market rates have seen a period of softer conditions since the last quarter with average tanker rates declining given weak seasonal demand due to autumn refinery maintenance and surge in oil prices, which has capped tonnage demand. In addition, voluntary output cuts by Saudi Arabia which has now been extended to the end of the year, has further reduced VLCC rates. Notwithstanding this, the petroleum shipping market rates are expected to strengthen for the rest of the year from strong seasonal demand, firm Atlantic exports, acceleration in refinery runs and seasonal trends. The Middle East conflict has introduced further global geopolitical and macroeconomic uncertainties. Amidst this volatile backdrop, the Petroleum & Product Shipping segment is continuing to improve the quality of its secured income and balance sheet through its shuttle tanker business and asset rejuvenation with dual-fueled newbuildings.
Higher oil prices have encouraged global upstream capex spending to remain strong as the world economy continues to return to its pre-pandemic path despite a slow yet resilient recovery. The demand for FPSOs is expected to remain positive with a healthy number of project sanctions around the world particularly from Brazil, being the largest market for FPSOs, followed by West Africa. The Offshore Business segment will selectively pursue new opportunities in the market and remain focused on executing the project in hand and undertake mitigation measures to minimise cost and schedule pressures. The segment’s financial performance will continue to be supported by its existing portfolio of long-term contracts.
For the Marine & Heavy Engineering segment, continuing higher oil prices amidst growing global demand is expected to encourage further recovery in upstream capex spending. Execution of some of the ongoing projects secured a few years ago remains challenging for its Heavy Engineering sub-segment due to additional cost and schedule impact, of which the recovery will continue to be pursued from clients. Vessel owners are likely to defer dry-docking due to anticipated rising energy shipment demand in the Far East and Europe this upcoming winter, creating stiffer competition amongst shipyards. Given this backdrop, the Marine sub-segment expects its business to remain challenging. The segment will continuously explore domestic and international markets, including venturing into decarbonisation and renewable energy. Additionally, it will continue to focus on the execution and delivery of all projects and improve its contracting strategies with clients.
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About MISC Berhad
MISC Berhad (MISC or the Group) is a global leader in delivering energy-related maritime solutions & services with 55 years of experience in the maritime industry. Our principal businesses comprise energy shipping and its related activities, owning and operating offshore floating solutions, marine repair and conversion, integrated marine services, port management and maritime services as well as maritime education and training.
The Group’s modern and diverse fleet consists of more than 100 owned and in-chartered vessels comprising of Liquefied Natural Gas (LNG) and Ethane carriers, Petroleum and Product vessels, Floating Production Systems (FPS) as well as LNG Floating Storage Units (FSU) with a combined deadweight tonnage (dwt) capacity of more than 13 million tonnes.
We are a proud constituent of the DJSI Emerging Markets Index and FTSE4Good Bursa Malaysia Index, a testament to our sustainability performance and strong Environmental, Social and Governance (ESG) practices. MISC Berhad is listed on the Main Board of Bursa Malaysia.
For more information, visit www.misc.com.my
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