KUALA LUMPUR: MISC Bhd has allocated US$4 billion (US$1 = 3.92) in capital expenditure (capex) over the next five years with the aim of securing more floating production storage and offloading (FPSO), and shuttle tankers projects.
Its FPSO segment is grouped under offshore business and shuttle tankers comes under the petroleum and product shipping segment.
President and chief executive officer Yee Yang Chien said US$500 million would be set aside for potential FPSO and shuttle tanker contracts yet to be secured this year.
“However, that amount (US$500 million) can be increased if we bag more contracts this year.
“We foresee growth potential in the demand for shuttle tankers in the North Sea, as well as, North America, where we have a presence through our unit, AET.
“Let’s not be confused with the profit growth driver for 2018 which will be coming from the liquefied natural gas (LNG) and offshore business,” he told a press conference after the company’s annual general meeting yesterday.
Yee also said thirty per cent of the capex would be funded from equity and 70 per cent from bank borrowings.
The LNG segment contributed the majority of the company’s earnings followed by the offshore business.
Concerning its fleet, Yee said all 27 LNG vessels were chartered out.
“Out of our 14 offshore facilities, two will be coming off charters this year and another two will see its charter expiring in two to three years.
“But, these four offshore assets have a minimal impact on our bottom line,” he added.
2017 was a challenging year for the shipping and offshore sectors as growth opportunities were scarce, while revenue was under pressure from weak freight rates and contract renegotiation risks.
“We see this trend continuing this year but we expect an improvement after 2018 due to the steady rise in oil prices,” he said.
For the financial year ended Dec 31, 2017 (FY17), MISC recorded a 23.2 per cent decline in net profit to RM1.98 billion from RM2.58 billion recorded in the previous year, mainly attributable to a RM687.5 million impairment loss compared with RM358.8 million in FY16. — Bernama