MISC’s Q1 profit more than halves, 7 sen dividend proposed

PETALING JAYA: MISC Bhd’s net profit more than halved to RM310.6 million for the first quarter ended March 31 2018 against RM676.2 million in the previous corresponding period, dragged by lower contribution from all the business segments.

Revenue was down by 32.2% to RM2.02 billion from RM2.98 billion.

The group has proposed to declare an interim dividend of 7 sen per share for the quarter under review, payable on June 12.

MISC’s liquefied natural gas (LNG) shipping segment saw a lower operating profit of RM275.2 million, due to lower revenue and the absence of the recognition of compensation for an early termination of the time charter contract for one of the vessels, which was reported in the same quarter a year ago.

The petroleum segment recorded an operating loss of RM39.2 million compared with the previous corresponding quarter’s profit of RM82.6 million, while the operating loss for the heavy engineering widened to RM25.5 million from RM15.6 million.

Meanwhile, the offshore segment’s operating profit fell to RM149.9 million from RM302.1 million on the back of lower revenue in Gumusut-Kakap (L) Ltd following the favourable adjudication results in the previous corresponding quarter.

Looking ahead, MISC said the petroleum shipping segment will be challenging with an expected weaker financial performance compared to that of 2017.

In the LNG shipping segment, the group said spot charter rates eased off in the first quarter on the back of diminishing winter demand and new tonnage delivery, after a strong pickup towards the end of 2017.

“Similar to petroleum shipping, the LNG shipping market is expected to face a weak spot market during the year as a result of tonnage overcapacity, exacerbated by a large number of long-term charter expiries.

“Nonetheless, most of the group’s LNG carriers are on secured long-term charters. Two new LNG carriers join the fleet in the first half of 2018 on long-term charters, providing growth to operating profits,” it said.

MISC believes a more stable and higher oil price environment in 2018 will pave the way for a gradual recovery in global offshore oil and gas investments.

“The expected recovery in the number of projects approved represent opportunities for the group, both locally and internationally, including opportunities in West Africa, Middle East and the America,” it said.

MISC added that the present portfolio of current long-term contracts in hand will support the offshore segment.