MISC 4Q21 net profit falls 17% on higher operating loss

Revenue up 16.79% to RM3.1b, underpinned by growth in revenue in all biz segments 


MISC Bhd’s net profit for the fourth quarter ended Dec 31, 2021 (4Q21) fell 16.96% to RM461.7 million from RM556 million a year ago, dragged by higher operating loss incurred by the marine and heavy engineering division and other adjustments. 

Revenue climbed 16.79% to RM3.09 billion from RM2.64 billion a year ago, underpinned by growth in revenue in all business segments, according to its filing to Bursa Malaysia yesterday. 

As a result, the energy shipping group registered a lower earnings per share (EPS) of 10.3 sen for the period compared to 12.5 sen previously. 

For the full financial year of 2021 (FY21), MISC posted a net profit of RM1.83 billion against a cumulative net loss of RM43 million, while revenue rose by 13.51% to RM10.67 billion compared to RM9.4 billion in FY20. 

MISC approved a fourth tax-exempt dividend of 12 sen per share with entitlement date on March 4, 2022, and payable on March 16, 2022. 

Commenting on prospects, MISC said the medium-term outlook for liquefied natural gas (LNG) shipping remains favourable as reflected by the record number of new LNG carriers ordered in 2021. 

Notwithstanding that, it said the operating income of the gas assets and solutions segment continues to remain stable, supported by its existing portfolio of long-term charters. 

MISC also added that the petroleum shipping market continues to be challenged by low freight rates, although there has been some modest improvement in the fourth quarter of 2021. 

“Despite continuing oil demand recovery and easing of production cuts by OPEC+ in 2021, seaborne trading volumes have remained below pre-pandemic levels, while the tanker fleet has continued to grow, albeit slowly. 

“In the short term, the outlook is clouded by the rapid spread of the Omicron virus variant,” it noted. 

Nevertheless, the group said the tanker market fundamentals are expected to improve further in 2022, especially towards the second half. 

It highlighted that given the uncertain landscape, the petroleum shipping segment will continue to focus on building long-term secured income through its niche 

shuttle tanker business and rejuvenation of its fleet with eco-friendly tankers. 

MISC also noted that as the oil market continues to rebalance and with oil prices staying high, the outlook of the upstream oil and gas sector continues to be positive. 

It said the floating production storage and offloading (FPSO) contract awards rebounded strongly in 2021 after a slump in 2020 and demand for FPSOs is expected to stay robust in 2022, despite lingering Covid-19 concerns. 

On the other hand, MISC said the offshore business segment continues to focus on the execution of the FPSO project in hand, while sourcing for opportunities in targeted markets. It added that in the meantime, the segment’s existing portfolio of long-term contracts will underwrite its financial performance. 

Meanwhile, the group noted that the surge of Omicron variant cases globally has caused concerns for the O&G industry heading into 2022, despite the improved O&G demand in 2021. 

As such, it said the marine and heavy engineering segment remains vigilant on the prospects of its heavy engineering sub-segment. 

It added that with high LNG demand, the expected increase in LNG trade would lead to dry-docking deferrals, resulting in stiffer competition among shipyards for limited dry-docking opportunities. 

MISC also said foreign clients will continue to send their vessels to other countries with less restrictions, considering various border restrictions worldwide. 

“Hence, the marine sub-segment is expected to remain challenging. 

“Given this environment, the segment will remain focused on replenishing its orderbook, as well as prioritising cost management efforts, safe execution and timely delivery of ongoing projects,” it said. 

Shares of MISC closed two sen or 0.29% lower to RM6.97 yesterday, valuing the group at RM31.11 billion.