MISC net profit halves on slower LNG division
Group sees promising petroleum tanker market in immediate term
PETALING JAYA: MISC Bhd’s net profit has been halved to RM341mil for the third quarter ended Sept 30 from RM680.5mil in the corresponding quarter last year.
The energy-related maritime solutions and services provider attributed the decline in its earnings to lower contributions from the liquefied natural gas (LNG) and offshore divisions.
During the quarter in review, the group saw its revenue falling 3.7% to RM2.23bil from RM2.32bil in the previous corresponding period. Its earnings per share (EPS) fell to 7.60 sen from 15.20 sen previously.
MISC has proposed a third interim dividend of seven sen per share, bringing the total dividend declared year-to-date to 21 sen per share.
The company’s shares closed one sen up yesterday to RM6.60.
For the nine months to September 2018, MISC’s net profit was lower by 49.2% to RM972.8mil, compared with RM1.91bil in the corresponding period last year, resulting in a lower EPS of 21.8 sen compared with 42.90 sen previously.
The group’s nine-month revenue fell 15.9% to RM6.39bil from RM7.60bil previously.
As for the group’s prospects, MISC said that in the immediate term, the petroleum tanker market looked promising due to a rise in seasonal demand in the upcoming winter months.
“Slowing newbuilding orderbook and continued scrapping of older tankers are additional immediate-term support factors.
“Over the longer term, growth in tonnemiles that is driven by rising movement of oil from the Atlantic region to Asia suggests a more robust outlook in charter rates,” the group explained.
It said the group’s LNG shipping unit would take advantage of the buoyant market conditions to lock in higher charter rates for two to three of its vessels which are presently in the spot market. Nevertheless, the operating income of the larger and core LNG fleet continues to be underwritten by the portfolio of long-term charters that are in place.
Meanwhile, the outlook for the offshore segment continues to be positive, supported by healthy activities in oil and gas exploration and production.
“A growing number of floating production system contracts are expected to be awarded over the coming years.
“Growth in income is expected in 2019, arising from full-year contributions of two new assets added in 2018,” it added.
On heavy engineering, MISC said the segment is expecting a pick-up in marine repair activities in the coming year in view of the impending compliance to the International Maritime Organisation fuel sulphur cap ruling by January 2020.
It is optimistic of maintaining the current level of repair activities for the final quarter of the year.
“Although the industry outlook continues to be challenging in the current year, the heavy engineering segment will focus on replenishing its order book,” it said.