MISC’s third quarter net profit dives 72%

> Lower contribution from LNG, petroleum and heavy engineering arms

PETALING JAYA: MISC Bhd’s net profit plummeted 72.3% to RM134.16 million for the third quarter ended Sept 30, 2016 against RM483.56 million in the previous corresponding period, due to lower contribution from the liquefied natural gas (LNG), petroleum and heavy engineering segments.

Revenue for the quarter dropped 8.5% from RM2.51 billion to RM2.29 billion.

In a filing with the stock exchange, MISC said the LNG shipping market is currently overwhelmed by the number of unutilised newbuild deliveries into the market which continues to dampen the long-term and short-term charter markets.

On a more positive note, it said the group’s present portfolio of long-term charters will support the steady financial performance for the LNG business segment.

MISC noted that petroleum tanker charter rates have softened considerably in the middle of the year as the sector took delivery of a higher number of newbuilds compared with last year, amid a build-up in global crude and products inventory.

However, in tandem with the pick-up of refinery activities leading up to the peak winter months, MISC expects its petroleum shipping business to end the year on a firmer note.

As upstream activities in the oil and gas sector remain subdued due to the low oil price environment, MISC is of the view that prospects of new tenders and projects remain poor in the offshore segment.

“As a result, order book replenishment at Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) remains a challenge and the underutilisation of assets may subject MHB to impairment charges which will significantly affect its current year financial results,” it said.

Despite the lack of greenfield projects, MISC’s offshore business unit has been able to participate in bidding for various brownfield development projects and longterm contracts in hand will continue to support the stable financial performance of the offshore business segment.

MISC’s nine-month net profit, however, rose 19.6% from RM1.72 billion to RM2.05 billion. Revenue came in at RM7.08 billion.