Earnings dip due mostly to impairment losses and operating loss from its petroleum segment
By NG MIN SHEN / Pic By MUHD AMIN NAHARUL
MISC Bhd’s net profit for the second-quarter ended June 30, 2017 (2Q17) fell 58.7% to RM556.5 million from RM1.35 billion recorded in the same period a year ago, due mostly to impairment losses and operating loss from its petroleum segment.
In an exchange filing yesterday, the company said it recorded an impairment loss on ships, property, plant and equipment of RM133.6 million during the period under review, as well as a net loss of RM17.2 million on liquidation of a subsidiary.
Its petroleum business recorded an operating loss of RM20.1 million in 2Q versus a profit of RM58 million in the previous quarter, as a result of the lower revenue and higher bunker costs in the current quarter.
The energy shipping and maritime solutions provider’s heavy engineering segment also recorded an operating loss of RM10.3 million compared to a loss of RM400,000 last year, mostly attributed to the lower contribution recorded.
Group revenue for 2Q dropped slightly to RM2.3 billion compared to RM2.39 bil- lion registered a year earlier, largely caused by a lower revenue from its petroleum and heavy engineering segments.
Its petroleum business saw a 12% drop in turnover due to lower freight rates and earning days in the current quarter, while revenue from the heavy engineering segment declined 13.5%, as most of its ongoing projects are nearing completion.
MISC said demand for petroleum tankers continues to be dampened in the immediate term, impacted by oil production cuts and draw-down of crude oil and products inventory. Freight rates are also being pressured by high fleet growth in 2017.
“Nonetheless, vessel demand generally improves with the year-end season demand,” the filing read.
Although the liquefied natural gas (LNG) shipping market continues to be affected by newbuilds delivery and expiry of older vessel charters, which has depressed spot rates, the group’s LNG business segment will maintain a steady performance due to its present portfolio of long-term charters in place.
For its heavy engineering business, the group will focus on diversifying into new revenue streams, while efforts to replenish its orderbook will continue, alongside the prioritisation of cost management, resource optimisation and operational efficiency.
“While heavy engineering has successfully secured several contracts during the period, the impact may not be seen immediately and the majority of the contribution will only be realised in 2018 and beyond,” MISC said.
The group declared a second interim tax exempt dividend of seven sen per share, with an ex-date of Aug 21, 2017, and entitlement date of Aug 23, 2017.
MISC’s shares fell 17 sen to RM7.33 yesterday, with 1.22 million shares traded.