MISC Annual Report 2017

77 Strategy & Performance PRESIDENT/GROUP CEO ’ S REVIEW We recogn i se t hat great s t reng t h comes f rom un i t i ng t he hear t s and m i nds of d i verse groups of people . I t i s t h i s comb i ned s t reng t h wh i ch g i ves t hem t he courage t o push t he i r l i m i t s and boundar i es and t o con t i nue do i ng t h i ngs be t t er every day . Our journey of resilience began in 2014 when we embarked on a rebuilding and rediscovery phase to strengthen our fundamentals, namely our aspirations, brand identity and working culture. From 2014 to 2016 we focused our efforts on shaping these fundamentals as well as defining our businesses in the energy related maritime solutions and services arena. The shift in our focus also culminated in the rollout of a refreshed Vision and Mission, the MISC2020 strategy and our Cultural Beliefs. In 2017, we ramped up our efforts and worked on consolidating our workforce and businesses, aligning the corporate brand and identity across the Group, as well as strengthening our capabilities to achieve our MISC2020 ambitions. As a result, we were able to ride out the ongoing downturn in the energy shipping segment and maintain our profitability. Today, with a solid foundation and clear perspective of who we are and where we need to get to, we are now in a better position to move the business forward guided by our MISC2020 strategy (which focuses on business targets) and our Sustainability Strategy (which focuses on value creation for our key stakeholders). In the coming years, the Group will focus on bolstering the brand essence of MISC where our people remain MISC’s greatest asset. Our 2017 Annual Report theme, “Unity in Diversity” , reflects our endeavours to foster more effective teamwork among our diverse workforce as well as to strengthen synergistic collaboration among our businesses and energy shipping industry players. We recognise that great strength comes from uniting the hearts and minds of diverse groups of people. It is this combined strength which gives them the courage to push their limits and boundaries and continue to be better every day. In order for our Company to move forward, it is important that we continue to harness the unified strength of our people through fostering and cultivating teamwork as well as enabling collaboration and positive relationships across our different businesses, departments and geographic locations. A united, strengthened and focused MISC will certainly be a force to be reckoned with as we pursue growth opportunities and continue to “move energy to build a better world”. STEADFAST PROGRESS DESPITE ONGOING CHALLENGES The year in review was another challenging business year for the shipping and offshore sectors with all segments experiencing strained market conditions. Project scarcity, contract renegotiation or termination, tonnage oversupply and downward pressure on freight rates were some of the recurrent themes. Many industry players also had their hands full with issues of restructuring and insolvency. The companies that did manage to keep their heads above water still had to contend with declining charter rates and implement continual cost optimisation measures to remain competitive. Against this already tough backdrop, shipowners and operators also faced the added burden of preparing their vessels to comply with impending regulations relating to ballast water management and a global sulphur cap. On the upside, the year saw Liquefied Natural Gas (LNG) bunkering opportunities arising from the gaining popularity of LNG as a marine fuel of choice. Even as this prevalent environment of challenge and change affected almost all industry players, MISC too was buffeted by strong headwinds. While none of our core business segments were spared the effects of the industry downturn, nonetheless, as they had taken the necessary steps to reshape and future- proof their businesses, they were able to mitigate the full brunt of marketplace volatility. Within our LNG Shipping segment, spot charter rates remained sluggish due to tonnage oversupply led by higher vessel deliveries and older vessels coming off charters. This compelled the segment to explore opportunities outside of conventional LNG shipping and venture into new applications like Floating Storage and Regasification Units (FSRUs) and LNG bunkering. Demand in the Petroleum Shipping segment continued to be affected by OPEC production cuts and high oil inventory levels. This was compounded by heavy delivery of new tankers and lower than expected vessel scrapping during the year. The Group’s Offshore Business segment had to contend with reduced opportunities in 2017. Akin to their global counterparts, Malaysian players experienced a dip in Floating Production System (FPS) orders as Oil & Gas investments were scaled down. In spite of a significant increase in the number of FPS projects awarded in 2017 as compared to the previous two years, the number of awards was still below the trend at the start of the decade.