Good day, and welcome to the Qatar Navigation 2022 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Bobby Sarkar. Please go ahead.
Thank you, operator. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Qatar Navigation or Milaha Q2 2022 results conference call. On this call we have Akram Iswaisi, who is the EVP of Finance and Investments at Milaha, and Sami Shtayyeh, who's the VP of Financial Planning and Analysis. We will conduct this conference with management reviewing the company's results, followed by a Q&A. I would like to now turn the call to Akram. Akram, go ahead, please.
Okay. Thank you, very much. Thank you for joining Milaha's first half of the year earnings call and your interest in the company. I'll be starting with our consolidated financial results, and then we'll go through our various segments before turning it over to Sami to go over our outlook for the rest of the year. Finally, as usual, we will end the call with questions and answers. The key highlights of our financial results. Milaha's operating revenues came in at QAR 1.77 billion for the first half of 2022, compared with QAR 1.37 billion for the same period in 2021, for an increase of 29%.
Operating profit came in at QAR 310 million for the first half of 2022, compared with QAR 144 million for the same period in 2021, for an increase of 115%. As for net profit, net profit for the first half of 2022 was QAR 641 million, compared with QAR 438 million for the same period in 2021, for an increase of 46%. Lastly, our earnings per share was QAR 0.56 for the first half of 2022, compared with QAR 0.39 for the same period in 2021. Moving on to our segments. Starting with maritime logistics. This segment continued its strong performance, witnessed over the past three quarters, primarily boosted by strong container shipping rates.
Top line revenue grew by 49% or QAR 247 million, much of that flowing to the bottom line, resulting in an increase in net profit of 159% or QAR 125 million. Moving on to offshore. Offshore similarly had a strong half year with operating revenue up 24% or QAR 113 million versus the same period in 2021. We had increased revenue from additional chartering, third-party chartering, employment of our liftboats. As you're well aware, that liftboat was idle most of last year. This year, the liftboat was actually operational. In addition to that, we had additional diving-related project work which drove the increase in revenue.
Overall operating expenses increased less than that revenue, which increased operating profit margins by 137% or QAR 25 million despite incurring increased COVID-instigated costs, particularly in the Q1 of 2022. Various accounting provisions and impairments that negatively impacted last year's results did not recur this year, which further helped to boost the year-over-year growth in the bottom line by QAR 29 million. With respect to Gas & Petrochem, it also boosted very strong results. Operating revenue came in lower by 23% or QAR 31 million, but expenses dropped by more than that, resulting in an operating profit tick up of QAR 5 million. Due to Milaha exiting the tanker business, which performed poorly last year due to near record low shipping rates.
On the non-operating level, income increased by QAR 43 million, with QAR 50 million additional coming from primarily our share in Nakilat and the QAR 14 million reduction or less coming from our VLGC joint venture, Delta Corp. PG, which got impacted by lower shipping rates compared to the same period last year. Net profit for the segment ended up QAR 48 million or 18% versus the same period in 2021. As for our trading segment, we saw an increase of 10% in revenue driven by our bunker and marine sales unit. Margin pressure negatively impacted the bottom line, growing from a loss of QAR 3 billion in the first half of 2021 to a loss of QAR 4 million for the same period in 2022.
Lastly, capital investment revenue increased by QAR 24 million and our real estate units increased by QAR 8 million, primarily from the villa compound leased out in Q3 of 2021. Both increases were partially offset by a QAR 16 million bad debt provision recorded in Q1 of this year and QAR 8 million in lower non-operating income. Net profit ended up QAR 4 million versus same period last year. That essentially wraps up the segment analysis. I will hand this over now to Sami Shtayyeh to discuss the outlook for the rest of the year.
Thank you, Akram. Starting with maritime and logistics. On the container shipping side, we expect rates to remain fairly stable rest of the year. In logistics, we expect uplift in warehousing and freight forwarding activity from new global network partnerships, as well as work related to the North Field expansion. In offshore, on both the support vessels and services side as well as the harbor side, we expect a continuation of what we've already witnessed this year. Additionally, it's worth mentioning that we just signed a five-year contract with a liftboat, which will stabilize income for that key asset for some time to come. In gas and petrochem overall, we expect limited volatility due to long-term nature of contracts we have in most business units. We do have one gas carrier which just came off a time charter, and we're studying options related to what to do with that.
We also have a VLGC JV in which results are difficult to predict as rates are exposed to volatile spot prices. In trading, growing the business, particularly ship chandling, is still a priority, and we expect positive results. Margins, however, remain a challenge but are also a focus area for us. Lastly, capital. On the investment front, we will continue to focus on yield enhancement. In real estate, we will continue to see, through the Q3, the positive year-over-year impact of the Villa compound that was rented out in Q3 2021. With that, we'll now open up for questions. Operator?
Thank you. If you would like to ask a question, press * 1 on your telephone keypad. If you're using a speakerphone, please ensure the mute function on your phone is switched off to allow the signal to reach our equipment. Again, that is * 1 to ask a question. We'll pause for a moment to allow everyone to dig in. Once again, if you wish to ask a question, that's * 1 on your telephone keypad. It appears we do not have any questions at this time.
Hey, this is Bobby Sarkar again. Well, maybe we can wait for a couple of minutes for Q&A from outside. Till then, let me ask a question. You know, shipping rates, container shipping rates for you guys have been very strong since about mid last year. Where do you see, you know, the near to medium-term outlook for shipping rates for the remainder of this year and then into next year? Thank you.
Thank you, Bobby. I'll take that question. Sami?
With respect to container shipping rates, listen, we're beginning to see rates come down, but at a very slow pace. We expect rates for the rest of the year to be relatively stable. Next year rates should continue to decrease. That's the global trend. The expectation is that rates will come down, but they will not come down immediately. They will come down at a much slower pace. Everybody, you know, expected this. The market, the container shipping market expects rates to come down as the, let's say, impact from COVID begins to subside, and things begin to normalize, rates will eventually come down.
The question is, are they gonna go back to pre-COVID levels, or are we looking at a new norm which is higher than pre-COVID levels? So far we're seeing, you know, let's say a slight dip in rates, but at a very slow pace.
Okay, great. Just a general question. Do your businesses have any impact, or do you foresee any positive impact from the upcoming World Cup?
In terms of the World Cup, to be honest with you, the main impact would be for us on the logistics and freight forwarding side. We're actively working on picking up additional business, obviously during that timeframe, the next six months. Essentially, the months after that follow, there will be quite a bit of work on the logistics side. We are targeting to try to capture some of that business.
Okay. My last question. Just the recent announcement that you had with QatarEnergy for the, I guess, the EPCI contract, QAR 1.4 billion over five years. When can we start seeing this, you know, impacting your top line in your offshore and your bottom line?
Listen, I think, I mean, I can honestly say I'm much more optimistic about offshore now. You know, there's a lot of optimism. There's a lot of business there. The market is very robust. If you look at it globally, the OSV market is doing exceptionally well. It's coming back again. I mean, again, we expect that, you know, again, in addition to Sami mentioned earlier, our lift boat is working again. We're gonna see a nice pick up the second half of the year. The second half of the year and starting next year, you'll begin to see the impact of this new business on our bottom line, in addition to other things that we're working on.
Right. Just to follow up on this contract, how can we go about like putting this into our models? Is this like going to be like more lumpy in nature or this is something you know which will be fairly regular in terms of the top line impact per quarter?
Well, this is a five-year contract, so I think for the most part it's recurring. There might be a small percentage of lump sum of volatility, but for the most part this is a long-term fixed contract for five years.
Okay. Great. Operator, do we have any questions from outside?
Thank you. Yes, we have received a question from Mustafa Amir from Al Rayan Investment. Please go ahead. Your line is open.
Hi, guys. Good afternoon. Congratulations on another strong set of results. Good to see the company doing really well. I just got a question on the FSO. The FSO, is that supposed to sort of, I think the tanker was supposed to be converted into the FSO. Will it, and I think it's been chartered as also. Will we see that impact coming through in the second half?
Yes, you will.
25
The FSO, will you see that? Yes.
Hello? Hello.
Go ahead.
Yeah, sorry. On the slide number nine, the -25 that we see on the waterfall, that's basically because it's not been deployed for the first half, right? It will be from the second half onwards.
That's correct. You know, the first half it will go into the conversion, and the second half will be deployed.
Sure. Sounds good. I just wanted to understand one more thing on the lift boat that, Bobby asked earlier. Now, in your outlook, it says that the lift boat contract was signed and will be taking effect, mid Q3 2022. Is this another lift boat or is this, there was already a lift boat that was sitting idle which was employed? I didn't quite understand that.
Well, this is the same liftboat that was idle last year that we brought back to Qatar, and now it's working. It will be working under a five-year contract. Now we're talking about increased utilization on one of our key assets.
Right. There was no impact on it for the first half, right? The liftboat was sitting idle for the first half.
Exactly. With that, I mean, obviously we are incurring operating expenses. Second half of the year, we'll see an impact from that in terms of revenue generation.
Perfect. Thank you so much. I appreciate it.