Thursday June 21, 2012
MISC sees better times ahead without liner ops
“We are confident that there will be no more provisions from the liner business. We have accounted for all of it. The liner business was just too costly to carry on. I think MISC is on the right track to strengthen balance sheets and core competencies,” Ratilal said after MISC AGM yesterday.
“We have taken a big hit by closing the liner business. We undertook it because we have suffered huge losses over the last four years. We are confident that once we put this behind us - we will not be taking anymore losses from the liner business,” its CEO Datuk Nasarudin Md Idris said.
He added that to dismantle and exit from the liner business involved a huge cost for MISC.
“Liner companies are getting bigger and have invested a lot with much bigger and more efficient ships that can ply all over the world. It is now almost like a cut throat business: whoever offers the cheapest rates will be able to carry cargo,” Nasarudin said.
“The ones that are exposed to the volatilities of the market would be the petroleum and chemical business. For these two (divisions), the rates will continue to be depressed because of the overcapacity - there are just too many ships in the petroleum trade. Rates for petroleum and chemical to continue to be depressed at least for the next couple of years until demand absorbs capacity,” Nasarudin said.
“For liquified natural gas (LNG), it is much better following the Japan earthquake and tsunami - a lot of these nuclear plants have been closed down thus there is greater demand for LNG. There are a lot of people who are currently building LNG ships on speculative basis. In the past people built LNG ships only when there were contracts,” he added.
Despite fetching firm charter rates (between RM90,000 and RM100,000 daily), Nasarudin said he was uncertain of the outlook for the LNG shipping.
On the group's capital expenditure for the year, Nasarudin said it had largely been committed.
This year, MISC would focus on the petroleum tanker division, he said without disclosing figures.
Asked if it would further divest loss-making businesses, Nasarudin said: “That is something that we continuously evaluate as part of our portfolio management.”