MISC’s Earnings Drop amid Poor LNG Performance
Malaysian shipping group MISC Berhad witnessed a drop in its earnings, mainly due to a slowdown in the liquefied natural gas (LNG) sector.
The company’s revenue was at RM 2.14 billion (USD 524.5 million) for the quarter ended June 30, 2018, dropping by 7% compared to MYR 2.3 billion reported in the same period a year earlier.
Operating profit dropped to MYR 347 million from the corresponding quarter’s profit of MYR 717.4 million, while its profit after tax dipped to MYR 309.2 million from MYR 553.8 million seen a year earlier.
The result was affected by the company’s performance in the LNG sector. Namely, MISC informed that its LNG revenue fell by 18.4% to MYR 595.9 million, mainly due to reduced number of operating vessels and a lower charter rate for the contract renewal of an LNG carrier in October 2017.
The sector’s operating profit plunged to MYR 274.6 million in the quarter, compared to MYR 557.7 million reported a year earlier, which included recognition of compensation for early termination of a time charter contract coupled with lower revenue in the current quarter.
MISC’s other sectors, including petroleum, offshore and heavy engineering, also saw a drop in revenues. In the petroleum business, the company’s revenue fell by 1.8% to MYR 1 billion, while revenue in the offshore sector fell to MYR 289.1 million from MYR 315.3 million.
MISC’s heavy engineering business delivered a revenue of MYR 232.4 million, 9.7% lower than the corresponding quarter’s revenue of RM257.3 million.
“Despite the tonnage oversupply situation in the spot market, indicators are positive for further improvements through the rest of the year. Nevertheless, our present portfolio of long term charters will provide stable income and cashflow to the group’s LNG business segment,” MISC said.
The company explained that the steady oil price recovery in recent months and renewed interest in growth opportunities have led to increase of activities in the offshore segment. However, the group’s Heavy Engineering segment is expected to remain under pressure in 2018.