MISC set to face more challenges

MISC Bhd, prepared to weather another year of rough tides in the shipping sector, will continue to revise its business portfolio to manage its financial resources and capital allocation.
In its Annual Report 2012, the shipping giant reiterated its cautious outlook for the year.
Chairman Datuk Manharlal Ratilal believes the company is ready to face this year's challenges and is prepared to catch the next upcycle in the industry, following the strategic corporate development which has resulted in renewed fiscal fitness.
“The shipping landscape will continue to be tough, in line with the uncertainties in global economic growth and rising geopolitical risks.
“This year would also see the last bout of heavy delivery of new capacity into the market, and we hope that there would be some respite for the shipping industry from 2014 onwards.
“Nevertheless, we will remain focused on our efforts to reshape our business portfolio to ensure there is an optimal balance between cyclical and non-cyclical businesses,” he said.
The company returned to the black in financial year 2012. For the first quarter of 2013, it locked in a net profit of RM300.4mil against a net loss of RM469.82mil a year ago, on the back of RM2.38bil in revenue. Revenue increased 7.6% from RM2.21bil in the previous corresponding quarter.
The company also expects a tightening in the supply of manpower within the shipping sector, as the delivery of vessel newbuildings lead to stiffer competition for the same talent pool of experienced crew.
On dividends, Manharlal said given the expected difficult operating year in 2013, the board did not recommend any final dividend payment for 2012 in consideration of immediate funding requirements and its operating cashflow.
“Nevertheless, please be rest assured that we will strive to resume dividend payment as early as we can and will seek to ensure that future performance will provide sustainable returns to shareholders.”
Group cash balance stood at RM4bil and net gearing ratio reduced substantially to 0.25 times from 0.48 times in 2012.
Last year, MISC exited from the container shipping business, enabling it to curb losses and create debt headroom, thus allowing the group to tap additional borrowings if needed.
It also undertook the monetisation of one of its biggest investment assets to date, the Gumusut-Kakap Semi-Floating Production System.
With it disposing of its 50% equity interest in Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL), MISC was able to raise cash of RM5.3bil for the group without seeking additional capital from shareholders or raising further debt.
In April, one of its key shareholders, Petroliam Nasional Bhd, failed in its bid to privatise it, with shareholders' acceptance falling 3.93% short of the 90% shareholding level needed to make the offer unconditional.
Source: The Star