MISC Group announces financial results for the year 2023

KUALA LUMPUR : MISC is pleased to announce its financial results for the financial year ended 31 December 2023.

Financial Highlights:

• Group revenue for the quarter and year ended 31 December 2023 were higher than the corresponding quarter and year ended 31 December 2022.
• Group operating profit for the quarter and year ended 31 December 2023 were lower than the corresponding quarter and year ended 31 December 2022.
• Group profit attributable to equity holders of the corporation for the quarter ended 31 December 2023 was lower than the corresponding quarter ended 31 December 2022 whilst the year ended 31 December 2023 was higher than the corresponding year ended 31 December 2022.
• Group cash flows generated from operating activities for the year ended 31 December 2023 was higher than the corresponding year ended 31 December 2022.

Group Revenue, Operating Profit and Profit Attributable to Equity Holders of the Corporation for the Quarter Ended 31 December 2023

Group revenue of RM4,278.3 million was RM105.3 million or 2.5% higher than the quarter ended 31 December 2022 (“corresponding quarter”) revenue of RM4,173.0 million, mainly due to higher revenue from new and ongoing projects for Heavy Engineering sub-segment and higher charter rates in Gas Assets & Solutions 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 December 2023 of RM874.7 million was RM219.6 million or 20.1% lower than the corresponding quarter’s profit of RM1,094.3 million mainly due to lower profit in the Offshore Business segment from lower construction progress from the FPSO conversion and additional cost provisions recognised in the current quarter while the decrease in the Gas Assets & Solutions segment’s operating profit was due to higher vessel operating costs in the current quarter.

The profit attributable to equity holders of the corporation of RM627.3 million was RM17.7 million or 2.7% lower than corresponding quarter of RM645.0 million mainly due to the lower operating profit mentioned above.

Group Revenue, Operating Profit, Profit Attributable to Equity Holders of the Corporation and Cash Flows from Operating Activities for the 12 Months Year Ended 31 December 2023

Group revenue of RM14,271.7 million was RM404.7 million or 2.9% higher than the revenue for the 12-months year ended 31 December 2022 (“corresponding year”) of RM13,867.0 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 and Gas Assets & Solutions segments. 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 year.

Group operating profit for the year ended 31 December 2023 of RM2,881.4 million was RM220.6 million or 7.1% lower than the corresponding year’s profit of RM3,102.0 million mainly due to operating loss recorded in the Marine & Heavy Engineering segment primarily attributed to the additional cost provisions arising from revised schedule on ongoing projects during the current year. However, both Petroleum & Product Shipping and Gas Assets & Solutions segments recorded higher operating profit from higher revenue as mentioned above.

The profit attributable to equity holders of the corporation of RM2,123.5 million was RM300.6 million or 16.5% higher than the corresponding year of RM1,822.9 million. This was contributed by the strong performance by both Gas Assets & Solutions and Petroleum & Product Shipping segments as well as lower impairment carried through to the current year despite the loss recorded in the Marine & Heavy Engineering segment.

The Group recorded cash flows generated from operating activities of RM5,696.3 million for the year ended 31 December 2023 which was higher by RM2,654.2 million or 87.2% compared to RM3,042.1 million in the corresponding year. This was contributed by the charter hire prepayment for two Floating Storage Units as well as higher charter rates from the Petroleum & Product Shipping segment. Additionally, the Group recorded lower payments for cost relating to turnkey activities for the conversion of an FPSO in the current year. Excluding the payments for the above turnkey activities, the Group’s adjusted net cash generated from operating activities of RM7,518.5 million was higher by RM1,796.5 million or 31.4% compared to RM5,722.0 million in the corresponding year.

Moving Forward

In the LNG shipping segment, despite a sharp decline in December 2023 due to a mild winter and European inventory buildup, spot rates remained elevated compared to historical levels. In the near term, softer market conditions are expected due to firm LNG fleet capacity growth. However, prospects remain positive driven by Asia’s LNG demand and increasing investments in LNG infrastructure. Additionally, tight vessel availability due to stricter environmental regulations requiring lower average vessel speed and retrofit timeouts, and canal disruptions at Suez and Panama will potentially boost LNG tonne-mile demand. Notwithstanding the above, 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, with average rates showing further escalation in the final quarter of 2023, despite a seasonal decline in December. Tight oil supply is anticipated through the first quarter of 2024 with the recent implementation of new OPEC+ output cuts. Nevertheless, the near-term outlook remains positive, supported by strong Atlantic exports and increased crude imports to Asia, and potentially higher tonne-mile demand due to shifts in trade patterns following the Red Sea crisis. The above bodes well for the Petroleum & Product Shipping segment, while it continues to identify growth opportunities particularly for dual-fuel assets.

The outlook for the upstream oil and gas sector remains robust given high oil prices, continued global oil demand and increased capex spending. The demand for FPSOs is expected to remain favourable, driven by a healthy number of project sanctions worldwide, with Brazil leading as the largest market for FPSOs followed by West Africa. The Offshore Business segment will selectively pursue new opportunities in the market while maintaining focus on executing current projects. Additionally, the segment’s existing portfolio of long-term contracts will continue to support its financial performance.

For the Marine & Heavy Engineering segment, continuing high oil prices, coupled with sustained oil demand, is anticipated to drive further recovery in upstream capex spending. The Marine sub-segment expects its business to remain challenging as competition intensifies with the emergence of new LNGC-repair shipyards in China and neighbouring countries. The segment will continuously explore domestic and international markets, including venturing into decarbonisation and renewable energy. It has also taken steps to improve client contracting strategies and will maintain its focus on the execution, cost management and delivery of all projects.