president/ceo’s report Despite plummeting oil prices, freight rates for the Petroleum shipping segment maintained a positive momentum in 2015. This was primarily driven by sustained global oil production that in turn supported steady demand for the movement of crude oil worldwide. Freight rates also maintained their upward momentum due to a much slower growth in new deliveries of tankers. The low oil price environment also led to lower bunker costs, which benefitted ship owners like us. Moving into 2016, oil supply demand dynamics remain favourable for the Petroleum shipping segment. To capitalise on the abundance of market opportunities in this area, MISC will continue to employ an optimum spotterm strategy for its tanker fleet. In stark contrast, the LNG shipping segment experienced a drop in spot charter rates and an overall reduction in vessel utilisation over the course of 2015. Even as excess capacity in the supply of LNG vessels continues to outpace demand growth, freight rates are expected to remain under pressure in the near future. The Group’s strategy of not building a vessel without a charter in hand continues to bode well for us with our existing long-term charter contracts continuing to provide long-term income stability for the company. Moving forward, we will continue to support PETRONAS’ LNG shipping requirements as well as explore additional opportunities with more thirdparty charterers. A YEAR OF CONTINUED PROGRESS MISC tur ned in a commendable performance on the financial and operational fronts in the year under review. For the financial year ended 31 December 2015, the MISC Group achieved 17.3% growth in revenue and a 51.1% rise in operating profit to RM10.91 billion and RM2.78 billion respectively compared to the previous year. The Group’s profit before tax (PBT) rose 6.5% to RM2.57 billion primarily on the back of higher profit from the Petroleum shipping segment business as a result of higher revenue, and a lower loss in the Chemical shipping segment from operating a reduced fleet of vessels. The main contributors to the Group’s PBT were the LNG shipping, Offshore and Petroleum shipping business segments, contributing over 90% to the Group’s PBT. The year saw us making good strides forward on the operational front too. Our Petroleum shipping segment under AET turned in a stellar performance on the back of improved market strength and buoyant freight rates. Even as oil producers continued to pump out oil amidst the low oil price environment, AET capitalised on the opportunity to move this oil. The year also saw AET embarking on a fleet renewal programme to bolster its competitive edge. In 2015, our LNG shipping segment successfully secured a contract novation from PETRONAS for five new LNG carriers together with a 15-year longterm charter contract. In addition, MISC also secured the charter extension for five Puteri Class carriers on a time charter basis for the next 10 years. 17.3% revenue 51.1% operating profit LNG Shipping, Offshore & Petroleum Shipping contribute over 90% to Group’s PBT 6.5% Profit Before Tax (PBT) + + REDISCOVER I REBUILD I SUSTAIN 54
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