Yinson 1QFY23 earnings up 7% on higher oil prices, US dollar

KUALA LUMPUR (June 23): Yinson Holdings Bhd’s net profit for the first quarter ended April 30, 2022 (1QFY23) rose 7.14% year-on-year (y-o-y) to RM120 million, from RM112 million, helped by stronger oil prices and US dollar.

The floating production storage offloading (FPSO) operator, which recently raised RM1.19 billion through a two-for-five rights issue, saw its quarterly earnings per share rise to 5.6 sen, from 5.1 sen, its bourse filing showed.

Notably, favourable forex rates helped earnings improve across the engineering, procurement, construction, installation and commissioning (EPCIC) segment, as well as the non-EPCIC segment comprising FPSO vessel leasing and marine services.

Higher oil prices also resulted in higher contribution from the group’s FPSO operations, it said.

The FPSO operations improvement also supported the 1.3% increase in quarterly revenue to RM1 billion, from RM992 million, although EPCIC revenue fell on weaker activities for FPSO Anna Nery, partly offset by fresh works under FPSO Maria Quitéria.

On a quarter-on-quarter (q-o-q) basis, Yinson’s net profit surged by 84.61% from RM65 million in 4QFY22, mainly due to both EPCIC and FPSO operations contributions having improved, coupled with the absence of fair value losses on other investments, and forex gains.

Revenue grew 35.63% q-o-q from RM741 million in 4QFY22, mainly due to commencement of EPCIC business activities for FPSO Maria Quitéria and higher contribution from FPSO operations.

On prospects, Yinson notes the increasing global energy demand which has been outstripping supply, causing strain on the global energy supply chain, and noted that the outlook for oil and natural gas remains significantly strong over the longer term, even though demand for alternative energy sources such as renewables has been rising.

Prices surged further from February due to the Russia-Ukraine conflict.

“Although the higher oil price encourages business activities within the oil & gas (O&G) industry, the conflict is of economic concern.

“Sanctions on Russia and Belarus are causing further inflation and supply chain bottlenecks on a global economy that is already straining to adjust to the challenges stemming from the Covid-19 pandemic,” Yinson said.

Yinson noted that it is well positioned to face the uncertainties “with a robust risk and internal control management in place”, as well as the current implementation of robust cost control management.

“We will continue to apply measures to prudently manage inflation risk including hedging, effective forecasting, diversification of costs across geographical markets, factoring inflation risk into our contracts and strategic management of our inventories,” it said.

Yinson’s share price settled one sen or 0.48% higher at RM2.11 on Thursday (June 23), giving it a market capitalisation of RM6.47 billion.