The largest drybulk shipowner in Malaysia, Malaysian Bulk Carriers (MBC) recorded a net profit of RM113.58 million (US$27 million) for the third quarter ended September 30 compared with a net loss of RM5.95 million (US$1.4 million) for the previous corresponding period.
The turnaround was mainly due to increase in charter rates, lower operating expenses from a smaller fleet size and gain from disposal of vessels.
According to MBC in a filing to Bursa Malaysia (stock exchange) on November 22, “In the third quarter of financial year 2021, the group recognized a gain of RM91.453 million (US$21.7 million) from the disposal of M.V. Alam Molek and M.V. Alam Madu for a total consideration of RM213.124 million (US$50.7 million).
“Loss on liquidation of subsidiaries of RM0.539 million (US$128,257) was recorded from the reclassification of the cumulative foreign exchange differences relating to the entities from equity to profit or loss upon liquidation.”
MBC’s earnings per share for the third quarter was 11.36 sen compared to a loss per share of six sen recorded in the previous corresponding period.
MBC’s revenue for third quarter grew 37.55 percent to RM58.68 million (US$13.9 million) from RM42.66 million (US$10.1 million) for the third quarter of its financial year 2020.
Surge in profit in nine months
For the first nine months of its financial year 2021, MBC reported a net profit of RM160.64 million (US$38.2 million), an increase of 453.93 percent from a net profit of RM29.0 million (US$6.8 million) in the previous corresponding period.
Reviewing its performance for the first nine months, MBC said the surge in its net profit was mainly due to non-recurring items of gain on disposal of property, plant and equipment of RM98.014 million (US$23 million) and gain on derecognition of a joint venture of RM6.869 million (US$1.6 million), offset against loss on liquidation of subsidiaries of RM539,000 (US$128.196).
MBC completed the disposal of a handy sized vessel (M.V. Alam Sejahtera) and two Supramax sized vessels (M.V. Alam Molek and M.V. Alam Madu) with total net proceeds of RM269.938 million (US$64.2 million) which resulted a total gain on disposal of RM98.009 million (US$23 million) in the first nine months of its financial year 2021.
MBC’s earnings per share for the first nine months was 16.06 sen per share compared to 2.90 sen per share for the previous corresponding period.
MBC’s revenue for the first nine months of its financial year 2021 grew 18.8 percent to RM158.92 million (US$37.8 million) from RM133.99 million (US$31.8 million) for the previous corresponding period.
According to MBC, for the first nine months, charter rates increased by 114 percent to US$17,225, from US$8,067 last year compared to corresponding last year while hire days reduced by 36 percent to 1,928 days from 2,990 days due to smaller fleet size.
MBC said, operationally, a higher net revenue of RM139.79 million (US$33.2 million) and operating profit of RM70.36 million (US$16.7 million) was recorded for its first nine months of financial year 2021. Comparatively, net revenue was RM95.04 million (US$22.6) and operating loss of RM7.85 million (US$1.8 million) was recorded in the previous corresponding period.
Global economy enjoys firm rebound in 2021
MBC said the global economy has experienced a firm rebound in 2021 and seaborne dry bulk trade is expected to grow at 1.7 percent in 2022.
“This rebound in the dry bulk market has seen freight rates hit a decade high and this has been exacerbated through stringent COVID-19 protocols enforced at various ports, particularly in China, creating supply chain bottlenecks,” MBC said.
According to MBC, changes to trade patterns, such as Chinese coal sourcing, have been accretive in ton mile terms and all these factors are set against a backdrop of historically low fleet growth due to the poor dry bulk market in the last decade.
However, MBC said, dry bulk charter rates have softened notably since late October, with China restricting steel output as well as imposing cap on coal prices for domestic suppliers.
“The ship sale and purchase (S&P) activities have also slowed down with potential buyers holding back in anticipation of a correction in asset prices. Whilst port congestion and logistics inefficiencies are still present, we expect freight rates to remain volatile going into 2022 with global growth likely to slow down from 2021 levels,” MBC added.