MISC’s 1Q net profit up 17.4% on stronger petroleum segment

By Finance

A six-fold jump in the profit of its petroleum segment lifted MISC Bhd’s net profit for the first quarter ended March 31, 2016 (1QFY16) by 17.4% to RM571 million or 12.8 sen per share.

The shipping giant recorded a net profit of RM486.31 million or 10.9 sen in the last corresponding quarter a year earlier.

Revenue for the quarter, however, fell 4% to RM2.39 billion, from RM2.49 billion a year ago.

MISC Bhd, a 62.7%-owned subsidiary of Petroliam Nasional Bhd (Petronas), did not declare any dividend for the current quarter under review.

MISC’s 1Q net profit up 17.4% on stronger petroleum segment

Chemical/Oil Products Tanker BUNGA ANGELICA - Image: Mookie

According to its financial statement to the exchange Friday, its petroleum segment was the best performer, while offshore and heavy engineering segments were the main lagers.

MISC’s petroleum segment recorded a six-folds jump in operating profit to RM221.4 million, from RM36.9 million, on the back of 27.3% increase in revenue of RM1.26 billion, from RM991.1 million last year.

The better performance was underpinned by the improved freight rates.

Notwithstanding that, its offshore segment chalked up an operating loss of RM164.5 million, as compared to a profit of RM82.4 million a year earlier. The losses were made up mainly by impairment provisions for early termination of contracts for two Mobile Offshore Production Units (MOPU) during the current quarter.

Its heavy engineering segment also sank into red with a operating loss of RM3.5 million, from a profit of RM38.1 million, as most of its offshore projects are nearing completion.

On its prospect, MISC expects the petroleum shipping segment to continue to benefit from robust demand for tankers, despite stronger growth in tanker supply in 2016 and on anticipation of there being no material cutback in global oil production.

It noted it is a challenge to develop new projects for the liquified natural gas (LNG) shipping and offshore businesses, amid the depressed price of oil and gas.

Nevertheless, MISC said its present portfolio of long term contracts in place for both business segments should help to underwrite a steady financial performance for the rest of the year.

“Given that the outlook of the Upstream oil and gas industry is projected to remain poor with the prolonged weakness in oil price, the prospects of the heavy engineering segment will remain very challenging,” it added.

Source: The Edge Markets