The petroleum shipping segment is expected to face a challenging 2018
By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL
MISC Bhd’s net profit dropped 54%, or RM365.6 million, to RM310.6 million in the first quarter ended March 31, 2018 (1Q18), compared to 2017 due to lower earnings from petroleum tankers, as well as lower tonnage demand.
The group’s revenue dropped 32.3% to RM2 billion, RM964.1 million lower than the previous corresponding quarter when all segments were affected.
Last year, the liquified natural gas (LNG) company’s revenue dropped 21.7%, or RM161.9 million — from RM746.5 million to RM584.6 million, mainly due to the reduced number of operating vessels and also a lower charter rate for the contract renewal of an LNG carrier in October 2017.
MISC’s petroleum segment revenue was down 24%, or RM308.9 million, to RM976.3 million in 1Q18, due to lower freight rates in the current quarter.
Its offshore segment’s revenue, on the other hand, fell 59.9% to RM294.9 million, due to the recognition of one-time gain for Gumusut-Kakap Semi Floating Production System (L) Ltd’s variation works following the favourable decision of the adjudication in February 2017.
Heavy engineering division also raked in lower revenue by 23.7% to RM179.9 million.
The other segments have collectively returned to the black of RM23 million from a net loss of RM17.8 million a year ago, on higher net foreign-exchange gain and higher contribution from integrated marine, port and terminal services.
The petroleum shipping segment is expected to face a challenging 2018 where performance for the year is anticipated to be weaker than in 2017.
As a result of tonnage overcapacity, exacerbated by a large number of long-term charter expiries, LNG shipping segment is to face a weak spot market during the year.
However, most of the group’s LNG carriers are on secured long-term charters.
The heavy engineering segment, meanwhile, is predicted to suffer from the scarcity of new contracts, despite signs of improving offshore investment in 2018.
On a positive note, in the medium to longer term, the trend in vessels scrapping is expected to continue supporting a recovery in freight rates.
The group believes the higher oil price will be positive for global offshore oil and gas investments. This will pave way for opportunities in West Africa, the Middle East and the Americas.
The board has approved a first tax exempt dividend of seven sen per share, in respect to the financial year 2018 (FY18), amounting to RM312.5 million.
The proposed dividend will be paid out on June 12, 2018, to shareholders registered at the close of business on May 28, 2018.
“Overall, we remain optimistic on long-term prospects and our focus remains on ensuring the successful execution of our five-year business strategy towards attaining a sustainable level of secured profits by FY20,” MISC president and group CEO Yee Yang Chien (picture) said in a statement yesterday.