PNSC Group Records 18% Profit Growth in H1

Despite the prevailing unfavorable macroeconomic conditions in the country, Pakistan National Shipping Corporation (PNSC) Group has managed to achieve an 18 percent increase in profit after tax in the first six months of the current financial year. The company has reported a profit after tax of Rs. 1.423 billion during the said period as against Rs. 1.204 billion in the corresponding period last year.

The group earnings per share increased to Rs. 10.77 as against Rs. 9.12 in the corresponding period last year.

Overall revenue from all segments has increased as compared to last year by Rs. 3.130 billion to Rs. 10.10 billion from Rs. 6.97 billion.

The major increase was seen in the dry cargo segment including slot charter, which increased by Rs. 1.570 billion whereas the revenue from liquid cargo increased by Rs. 1.553 billion considering the decline of Rs. 616 million from owned oil tankers followed by a significant increase of Rs. 2.169 billion from foreign-flagged vessels.

Due to the controlled strategies implemented by management, other expenses at the group level decreased by Rs. 108 million (46 percent). The finance cost on long-term financing decreased by 18 percent to Rs. 243 million in the current period as against Rs. 298 million in the same period last year.

This was mainly due to the repayment of a long-term loan. No new loan has been obtained in the reporting period.

Future Plans

The dry bulk market in general remains significantly elevated above average 2020 and 2019 levels. The Chinese economy has slowed down compared to its breakneck pace in late 2020 and early 2021, 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 trends 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 the impacts of COVID-19 and the spillover from the containership sector have ensured high demand, with a 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.

As far as the tanker sector is concerned, the recent wave of new coronavirus variant appears to have been limited compared to 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 with support from continued recovery in oil demand and supply and further rebalancing expected next year as tanker demand rebounds above the pre-COVID level. Although the upside may be limited by the extent of cumulative fleet growth since the start of the pandemic.

Overall, the tanker market is expected to continue to face challenges in the short term with the seaborne oil trade remaining way below pre-COVID levels. However, improvements are expected to gradually materialize over 2022-23.



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