MISC Group Financial Results for the First Quarter of 2024

Financial Highlights:

• Group revenue, operating profit and profit attributable to equity holders of the corporation for the quarter ended 31 March 2024 were higher than the corresponding quarter ended 31 March 2023.
• Group cash flows generated from operating activities for the quarter ended 31 March 2024 was lower than the corresponding quarter ended 31 March 2023.

Group Revenue, Operating Profit, Profit Attributable to Equity Holders of the Corporation and Cash Flows Generated From Operating Activities for the Quarter Ended 31 March 2024

Group revenue of RM3,638.3 million was RM559.6 million or 18.2% higher than the quarter ended 31 March 2023 (“corresponding quarter”) revenue of RM3,078.7 million was mainly contributed by higher revenue from ongoing projects in the Marine & Heavy Engineering segment and higher earning days achieved in the Petroleum & Product Shipping segment. The increase in Group’s revenue was however offset by lower revenue recognition 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.

Group operating profit for the quarter ended 31 March 2024 of RM882.0 million was RM56.5 million or 6.8% higher than the corresponding quarter’s profit of RM825.5 million due to higher profit in the Petroleum & Product Shipping segment in tandem with the higher revenue. The increase in Group’s operating profit was however offset with lower profit in the Offshore Business segment from lower construction progress from the FPSO conversion recognised in the current quarter.

The profit attributable to equity holders of the corporation of RM759.9 million was RM147.0 million or 24.0% higher than the corresponding quarter of RM612.9 million due to the higher operating profit mentioned above coupled with higher impairment provisions recognised in the corresponding quarter.

The Group recorded cash flows generated from operating activities of RM210.8 million for the quarter ended 31 March 2024 which was lower by RM696.3 million or 76.8% compared to RM907.1 million in the corresponding quarter due to higher payments made to creditors.

Moving Forward

In the LNG shipping segment, rates softened in the first quarter 2024 due to seasonally weak demand and inventory buildup in Europe and Northeast Asia market. In the current year, the prospects for the LNG shipping market remain positive as spot rates are anticipated to gradually improve in line with seasonal demand. The operating income for the Gas Assets & Solutions segment is anticipated to remain stable, supported by its portfolio of long-term charters.

For the Petroleum shipping segment, market rates have remained firm amidst an increase in tonne-mile demand driven by growing long-haul Atlantic exports, notably from the US, Brazil and Guyana. The current year outlook remains positive with favourable tanker supply-demand fundamentals. The Petroleum & Product Shipping segment will continue to identify opportunities particularly in dual-fuel assets and focus on building long-term secured income to generate business growth.

Global upstream capex spending remains resilient during the first quarter of 2024, amidst the current high oil price. The demand for Floating Production Storage and Offloading units (FPSOs) is anticipated to remain robust throughout the year primarily driven by the increase in global oil demand and a healthy number of planned projects mainly from Brazil, Africa and Asia-Pacific. The segment’s secured revenue stream from its current portfolio of long-term contracts will continue to provide stable support for its financial performance. The Offshore Business segment will strategically and selectively pursue new opportunities in the market while maintaining focus on operationalising its current projects.

For the Marine & Heavy Engineering segment, global upstream capex spending remains robust, driven by tighter global supply due to the heightened geopolitical landscape and OPEC+’s supply restrictions. The Heavy Engineering sub-segment aims to broaden its customer base and capitalise on potential opportunities both in conventional and clean energy spaces. Meanwhile, the Marine sub-segment will benefit from conversion projects arising from greater demand for upstream activities. Nevertheless, the Marine & Heavy Engineering segment will continue its efforts to mitigate risks arising from the supply chain disruptions and price escalations which are anticipated to persist given the volatile geopolitical landscape.
Source: MISC Group