The Pakistan National Shipping Corporation (PNSC) Board of Directors has presented the unconsolidated and consolidated condensed interim financial statements of PNSC and Group for the six months ended December 31, 2021. These financial statements of the Corporation have undergone a limited-scope review by the external auditors under the statutory requirements of the Companies Act, 2017.
Performance Review
Despite the country’s prevailing unfavourable macroeconomic environmental condition, the PNSC Group has achieved an 18% increase in profit after tax of Rs.1,423 million as against Rs.1,204 million in the corresponding period last year. Group earnings per share increased to Rs.10.77 against Rs.9.12 in the corresponding period last year. Cumulatively, the Group achieved a turnover of Rs.10,106 million (including Rs.3,926 million from PNSC) compared to Rs.6,975 million (including Rs.1,362 million from PNSC) for the corresponding period last year.
Overall revenue from all segments has increased compared to last year by Rs.3,130 million (45%). The major increase was seen in the Dry Cargo segment, including slot charter, which was increased by Rs.1,570 million. In contrast, the revenue from Liquid Cargo was increased by Rs.1,553 million, considering the decline of Rs.616 million from owned oil tankers, followed by a significant increase of Rs.2,169 million from foreign flagged vessels.
Due to the controlled strategies implemented by management, other expenses at the group level have been decreased by Rs.108 million (46%). The finance cost of long-term financing decreased by 18% to Rs. 243 million in the current period as against Rs.298 million in the same period last year. This is mainly due to the repayment of long term loans, and; there is no new loan has been obtained in the reporting period.
Future Prospects
Dry Bulk Sector
The Dry Bulk Market, in general, remains significantly elevated above average 2020 and 2019 levels. Compared to its break neck pace in late 2020 and early 2021, the Chinese economy has slowed down, with industrial production going back down to its average levels. Although there was a dip in freight rates earlier in the year, they have once again started to rise, with the trend lines firmly pointing upwards. Despite this correction, overall, the outlook for the dry bulk sector, as reflected by Baltic Dry Index (BDI), remains positive due to strong fundamentals. Port congestion, particularly from Covid -19 and the spillover from the containership sector, have ensured high demand, with the supply of vessels unable to keep pace due to a declining order book. However, it is difficult to forecast charter freight rates, in the long run, considering the volatile/cyclic nature of BDI.
Tanker Sector
The recent wave of new coronavirus variant “Omicron” has impacted global oil demand appears to have been more limited than previous waves of Covid-19, and major forecasters expect oil demand to return to pre-Covid levels later this year. The tanker market is expected to gradually improve through 2022, supporting continued recovery in oil demand and supply. Further rebalancing is scheduled for next year as tanker demand rebounds above the provided level. However, the extent of cumulative fleet growth may limit the upside since the pandemic’s start.
Overall, the tanker market is expected to continue to face challenges in the short term, with the seaborne oil trade remained way below pre-Covid levels. However, improvements are expected to gradually materialise over 2022-23, potentially with additional support from the supply-side may be benefited due to new environmental regulations.