by SHAZNI ONG/ graphic by MZUKRI

MISC Bhd’s earnings for the second quarter ended June 30, 2020 (2Q20), fell 29.09% year-on-year (YoY) to RM299.5 million as the energy logistics provider took a heavy toll from recognition of impairments due to the impact of the Covid-19 pandemic and the downturn in the oil and gas (O&G) sector.

The reduction in profit was mainly due to the recognition of an impairment loss amounting to RM300 million on property, plant and equipment, and right-of-use assets at its heavy engineering segment.

Revenue for the quarter was up 1.1% YoY at RM2.19 billion due to higher contributions from its petroleum segment following improved freight rates and higher-earning days in the liquefied natural gas (LNG) segment.

The increase was softened by lower revenue in the heavy engineering segment, it stated in its exchange filing yesterday.

MISC saw lower contribution from ongoing heavy engineering projects and lower dry docking services in the marine segment following the yard shutdown during the Movement Control Order and the government’s border restriction ruling which prohibited international clients from coming to the yard due to the Covid-19 pandemic.

Operating profit for the quarter at RM522.9 million was 8% higher than the corresponding quarter’s operating profit of RM484.3 million, mainly due to the higher freight rates in the petroleum segment and higher-earning days in the LNG segment.

This increase, however, was offset by the operating loss recorded in the heavy engineering segment mainly from lower revenue coupled with additional cost provisions and higher unabsorbed overheads arising from the Covid-19 pandemic in the current quarter.

MISC, nonetheless, declared a second tax-exempt dividend of seven sen per ordinary share, payable on Sept 15, 2020.

“We remained steadfast to our earnings resiliency and will continue to pursue markets that are pivotal to the built-up of our sustainable income. As we move on to the next quarter with a firm and steady steer, MISC will continue with the completion of projects and expenditure optimisation across the group,” its president and group CEO Yee Yang Chien said.

For the cumulative six months, MISC recorded a net loss of RM857.3 million compared to a net profit of RM910.3 million in the same period last year, while revenue rose 5.87% YoY to RM4.7 billion.

Malaysian Rating Corp Bhd (MARC) has affirmed its AAAIS rating on MISC’s RM2.5 billion Islamic medium-term notes programme with a stable outlook.

The affirmed rating continues to benefit from rating uplift on MARC’s expectation of strong parental support from Petroliam Nasional Bhd (Petronas) based on the operational and financial integration between the companies.

“MISC serves as the main LNG shipping provider for Petronas. Its standalone rating considers stable revenue generation from LNG shipping and offshore contracts, as well as a strong liquidity position.

“MISC remains a key global player in the energy-related shipping business and has a sizeable fleet of LNG, petroleum and chemical vessels, as well as offshore floating assets,” the rating firm said in a statement yesterday.

MISC’s shares closed 0.13% or one sen lower to RM7.87, valuing the company at RM35.13 billion.