MISC BERHAD • Annual Report 2016 58 President/Group CEO’s Review and MD&A OUR STRATEGIC PRIORITIES To reinforce and sustain MISC’s position in the Oil & Gas sector as a leading provider of energy-related maritime solutions and services, we continue to bring several strategic elements into play. A year after our revitalised Vision, Mission and Tagline as well as MISC2020 corporate strategy were introduced, these elements are well entrenched within our corporate culture. Today, these elements are helping to unite the MISC family and are guiding us on our journey to realise our full potential. To recap, our MISC2020 five-year strategic plan (2016-2020) calls for the Group to deliver on two primary objectives, namely: • To achieve a sustainable level of secured profit by 2020; and • To achieve a sustainable return on average capital employed (ROACE) of more than 10% by 2020. In order to achieve a sustainable level of secured profit by 2020, MISC will set its sights on absorbing all fixed costs and overheads as well as absorbing losses from cyclical business segments during the worst of cycles. This will ensure that the Group never falls into the red in the worst of times. To deliver a sustainable ROACE of more than 10% by 2020, MISC will focus its efforts on instilling the discipline to spend wisely and make the right investment decisions. In line with these overarching objectives, our core LNG Shipping, Petroleum and Products Shipping, Offshore Business as well as Marine & Heavy Engineering business segments will prioritise specific initiatives over the five-year timeframe. To attain a sustainable level of secured profit by 2020, our business segments will pursue these pathways to prosperity: LNG Shipping: Given the expected decline in LNG profitability, there is an urgent need to build a sustainable stream of secured profit. As such, our LNG Shipping segment will set its sights on expanding its portfolio of third party LNG time charters and ensure they are value accretive despite the current competitive landscape. The segment will also focus its efforts on developing concepts for non-conventional LNG solutions. Petroleum and Products Shipping: Helmed by AET, this segment will continue to evolve its business and asset mix to garner more long-term businesses. It will look to secure a good mix of time and spot charters as well as explore expansion opportunities within the niche shuttle tanker segment. The latter will help provide long-term secured income to help moderate any downturn in the cyclical spot market. A 5-YEAR MASTER PLAN TO ACHIEVE SUSTAINABLE PERFORMANCE Sustainable level of secured profit by FY2020 Sustainable ROACE (Return on Average Capital Employed) of more than 10% by 2020 • Absorb all fixed cost and overheads • Absorb all losses from cyclical business segments during the worst of cycles • Instill DISCIPLINE to spend wisely • Make the RIGHT investment decisions
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