MISC ends FY20 in loss, declares 12 sen dividend for 4Q20

The logistics group’s net loss is due to the legal dispute charge of RM1.8b with Sabah Shell Petroleum

By HARIZAH KAMEL / Pic source misc.com.my

MISC Bhd stated that its business has remained robust despite the pressures of the Covid-19 pandemic on the economy, with the loss suffered for financial year 2020 (FY20) due primarily to legal disputes provisions and impairments made.

The logistics group’s net loss of RM43 million for the year ended Dec 31, 2020, was due to the legal dispute charge of RM1.8 billion with Sabah Shell Petroleum Co Ltd the company made mainly in the first quarter of last year (1Q20).

In a stock exchange filing yesterday, MISC noted that provision for litigation claims amounted to RM1.04 billion and write-off of trade receivables and loss on re-measurement of finance lease receivables of RM846.2 million were recognised in the current year, following the decision by the Arbitration Tribunal on the group’s arbitration proceeding against Sabah Shell Petroleum.

It also recorded higher impairment loss on ships, offshore floating assets and other property, plant and equipment of RM331.4 million.

The loss was partially offset by RM178.4 million higher share of profits from joint ventures and an associate, from RM250.6 million profit in the corresponding year to RM429 million in the current year follow- ing the recognition of a one-time gain from a contract extension secured during the year.

For the full year, MISC posted a revenue of RM9.4 billion, 4.9% year-on-year (YoY) higher than RM8.9 billion it made in FY19.

Earnings for 4Q20 soared 122% YoY to RM556 million on increased shipping capacity as revenue rose 11.2% YoY to RM2.64 billion, mainly due to recognition of construction revenue for a floating, production, storage and offloading (FPSO) vessel in the offshore segment and higher revenue from ongoing heavy engineering projects in the current quarter.

MISC stated that the Covid-19 pandemic has not materially affected the financial performance, financial position, cash- flows, and the liquidity of liquified natural gas (LNG) and offshore businesses in the year-to-date.

“However, the petroleum shipping segment’s financial performance in the second half of the year was affected by the lower freight rates due to the impact of the pandemic on global oil demand,” it noted in an exchange filing yesterday.

Its heavy engineering business was also impacted with the brief shutdown of yard operations, prolonged border control measures and the introduction of standard operating procedures, which resulted in extended duration to the segment’s ongoing heavy engineering pro- jects and lower repair jobs in the marine segment.

Its LNG segment’s profit rose to RM641.5 million driven by higher earnings days following lower-dry dockings and delivery of a very large ethane carrier in the quarter.

Its petroleum segment’s revenue declined to RM694.3 million on the back of lower freight rates and fewer vessels in operations during the period.

Revenue for the offshore segment was RM604.6 million in 4Q20 versus RM297.3 million in 4Q19 mainly due to the recognition of construction revenue for an FPSO.

Heavy engineering segment recorded revenue of RM696.5 million mainly from increased activities in ongoing heavy engineering projects.

Going forward, the group will continue to focus on completing ongoing projects, optimising operating expenditure and pursuing growth prospects to ensure resilience and sustainability of its business operations.

MISC has approved a fourth tax-exempt dividend of 12 sen per share, to be paid on March 16, 2021. The dividend took its full- year dividend to 33 sen a share.