Malaysia-listed shipping line MISC will continue to rely on its long-term contract in liquefied natural gas (LNG) shipping and offshore business segments for its financial performance in 2015.
According to its filing to the Malaysia stock exchange or Bursa Malaysia, the company describes 2015 as “challenging”, especially to its oil and gas services business segment, as evident from major oil companies reduced capital and operating expenditures in the low oil price environment.
Despite the weak market sentiments, MISC finds strength in its petroleum shipping segment from sustained global oil production.
“Barring any material cutbacks in global oil production, the recent strength in petroleum shipping could be sustained for the year,” said MISC in a press release statement.
However, the company reflected a mixed outlook for its chemical shipping segment due to the market’s uncertainty and sluggish demand and growth in certain economic zones.
Meanwhile, the company posted a profit of MYR512.1 million (USD143.7 million) for the first quarter ended 31 March 2015, a slight dip from MYR511.8 million in the first quarter in 2014.
The decline in profit was recorded despite a slight increase of 8.7% y/y to MYR2.49 billion in its earning for the first quarter in 2015, as compared with MYR2.29 billion in the corresponding period in 2014.
The increase in MISC’s revenue was mainly due to improved freight rates in petroleum business and commencement of finance lease income of a floating, production, storage, and offloading (FPSO) unit in September 2014. However, a smaller fleet of operating vessels in the company’s chemical business and lower earning days in LNG business moderated the increase in group revenue.
In the meantime, MISC has also entered a novation agreement for the construction and delivery of five new LNG Carriers from Malaysia-based oil and gas company Petroliam Nasional (Petronas).
Previously, the construction of the five LNG carriers were given to South Korean shipbuilders Hyundai Heavy Industries but were later transferred to MISC. Each of the newbuilds comes with a time-charter for 15 years with the option for a five-year extension and the five vessels are scheduled for delivery between September 2016 and December 2017.
In addition, MISC has also entered an agreement with Petronas for a 10-year time-charter contract extension for each of the five refurbished Puteri-class LNG carriers. The respective charters are expected to commence from September 2015 to September 2017.