The overall supply demand balance in the bulk carrier sector remains supportive with ton mile demand projected to grow by 2.2 percent in 2022 versus fleet growth of two percent.
Malaysian Bulk Carriers (MBC), the largest drybulk shipowner in Malaysia, returned to the black for financial year 2021, posting a net profit of RM192.53 million (US$46 million), compared to a net loss of RM20.78 million in financial year 2020.
The group registered an earnings per share of 19.25 sen for financial year 2021 compared to a loss per share of 2.08 sen in the previous financial year, MBC said in a filing to Bursa Malaysia stock exchange on February 23.
The impressive turnaround was mainly due to the increase in operating profit, as well as non-recurring items of gain on disposal of property, plant and equipment, reversal of vessel impairments, and the gain on derecognition of a joint venture.
According to MBC, the group completed the disposal of a handysize vessel namely M.V. Alam Sejahtera and two Supramax vessels namely M.V. Alam Molek and M.V. Alam Madu with total net proceeds of RM269.94 million, which resulted in a total gain on disposal of RM98.01 million in financial year 2021.
MBC also reversed an impairment loss of RM14.83 million on its vessels and right-of-use assets in financial year 2021. The group recoded an impairment loss of RM55.78 million in financial year 2020.
MBC recorded a gain on derecognition of a joint venture of RM6.869 million and loss on liquidation of subsidiaries of RM0.539 million in financial year 2021.
MBC’s revenue grew 17.64 percent to RM207.04 million in financial year 2021 from RM175.99 million in the previous financial year. At operating level, net revenue for the group was higher at RM181.09 million compared to RM130.85 million in financial year 2020.
The group recorded an operating profit of RM93.01 million for financial year 2021 compared to an operating loss of RM3.59 million in the previous year. The improvement in operating performance was mainly due to an increase of 111 percent in charter rates to US$18,092/day in financial year 2021 from US$8,566/day in the previous financial year.
This was achieved despite lower hire days of 2,372 days in financial year 2021 compared to 3,848 days in previous financial year from a smaller fleet size. MBC said operating expenses were lower in financial year 2021 with the smaller fleet size from the disposal of three vessels and the redelivery of two chartered-in vessels during the year.
Back in the black
For the fourth quarter of financial year 2021, MBC was back in the black with a net profit of RM31.89 million compared to a net loss of RM49.78 million in the previous corresponding period. The profit was achieved on the back of RM48.13 million revenue, an increase of 14.62 percent from RM41.99 million in the fourth quarter of 2020.
Earnings per share for the fourth quarter of financial year 2021 stood at 3.19 sen compared to a loss per share of 4.98 sen in the previous corresponding period.
The group said its net profit of RM31.89 million for the fourth quarter was lower than the third quarter’s RM113.57 million. Net revenue and operating profit in the fourth quarter of financial year 2021 stood at RM41.30 million and RM22.65 million respectively, a decrease compared to third quarter’s net revenue and operating profit of RM50.50 million and RM27.95 million.
Operationally, the fall was mainly due to the lower charter rates of six percent to US$21,857/day for the fourth quarter compared to USD23,350/day for the third quarter. The decrease was also attributed to lower hire days of 444 days in the fourth quarter compared to 523 days in the third quarter of financial year 2021 from the smaller fleet size.
The group reviewed the carrying values of its vessels and right-of-use assets and reversed the impairment loss of RM14.833 million in the fourth quarter of financial year 2021.
MBC said a provision for expected credit losses was made on trade receivables of RM2.71 million, and this provision is reflected in other operating expenses in the fourth quarter of financial year 2021.
According to MBC, in the fourth quarter of 2021, the dry bulk shipping market came off from its peak in October. The company said China’s energy crunch started to ease with the increase in domestic coal production and the slowdown of industrial activities also reduced iron ore and coking coal imports. As such, the freight market experienced a significant drop in the fourth quarter.
MBC said despite the correction and the seasonal softness in the first quarter of 2022, thus far, the overall outlook for the freight and second-hand ship market remains generally positive.
“With a limited fleet supply growth and near-term factors like port congestion, fleet capacity is expected to stay relatively tight.
“The overall supply demand balance in the bulk carrier sector remains supportive with ton mile demand projected to grow by 2.2 percent in 2022 versus fleet growth of two percent.
“However, there are other factors such as geopolitical instability, regional conflicts, trade wars and civil unrest that may impact the shipping market this year.”
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