MISC’s third-quarter earnings 2.9% lower, weighed down by offshore, LNG segments

PETALING JAYA: MISC Bhd’s net profit for the third quarter ended Sept 30, 2020 fell 2.9% to RM258.3 million from RM266.1 million a year ago mainly dragged down by the offshore and liquefied natural gas (LNG) segments.

Group revenue of RM2.06 billion was 4.1% lower than the previous corresponding quarter’s revenue of RM2.15 billion.

For the nine-month period, MISC saw a net loss of RM599 million compared with a net profit of RM1.18 billion in the previous year’s corresponding period mainly due to provisions and impairment loss recorded in the first quarter of 2020 relating to the adverse decision on arbitration proceedings by Gumusut-Kakap Semi-Floating Production System (L) Ltd against Sabah Shell Petroleum Co Ltd.

Group revenue of RM6.76 billion was 2.6% higher than RM6.59 billion revenue for the nine-month period ended Sept 30, 2019 with higher contributions from all segments except offshore.

MISC president & group CEO Yee Yang Chien said the group will remain focused on strengthening its portfolio of long-term contracts in its core businesses and continue its pursuit for markets, which are integral to the built up of its sustainable income.

In the LNG shipping market, spot charter rates have strengthened ahead of the traditionally busy winter trading season on the back of Asia-LNG demand recovery and buyers securing supplies in anticipation of the colder months. Slower pace of LNG supply growth and some instances of weather-related outages at liquefaction plants have tightened supply and is expected to provide further support to the spot charter rates in the fourth quarter of the year.

The crude tanker market meanwhile continues to be affected by weak tonnage demand coupled with increased vessel availability from the unwinding of floating storage.

The marine business segment is expected to continue to be challenging for the remainder of the year due to the limited number of dry-docking works exacerbated by the pandemic that leads to stiffer competition.

Given the prolonged oil market downturn prognosis, the heavy engineering segment remains vigilant in pursuing business opportunities in other segments to replenish its order book and continues to focus on cost management to optimise its operating cost and to prioritise safe execution and delivery of ongoing projects while the market is recovering.