KUALA LUMPUR: MISC Bhd posted a lower net profit of RM258.3mil in the third quarter ended Sept 30,2020 due to reduced revenue from the liquified natural gas (LNG), petroleum and offshore segments but maintained its dividend payout of seven sen a share.
The shipping group announced to Bursa Malaysia that these factors saw net profit declining by 2.9% from the RM266.1mil a year ago. Its operating profit of RM330mil was down by RM46.4mil when compared with RM376.4mil a year ago.
MISC said revenue declined by 4.1% to RM2.06bil from RM2.14bil. Earnings per share were 5.8 sen compared with six sen a year ago.
Its LNG revenue fell by 5.7% to RM613.4mil from RM650.4mil a year ago, mainly from lower earning days following dry-dockings and off-hire of certain vessels in the current quarter. Its operating profit fell by 14% to RM239mil from RM278mil mainly due to lower earning days.
As for petroleum, revenue under this segment declined by 13.2% to RM851.1mil from RM980mil, mainly from lower freight rates and reduced number of vessels in operation in the current quarter. Its operating profit dipped to RM20.1mil from RM21mil, mainly due to lower revenue but offset by lower vessels operating costs.
MISC also said offshore revenue fell by 17.4% to RM215mil from RM260.2mil mainly due to the impact of reducing finance lease income and the expiry of a floating, storage and offloading (FSO) contract in December 2019. Hence, its operating profit declined by RM18.1mil.
However, its heavy engineering revenue rose by 45.3% to RM369.4mil from RM254.3mil mainly due to increased activities in ongoing heavy engineering projects. It posted an operating profit of RM2.3mil compared with a loss of RM4.8mil a year ago.
For the nine months ended Sept 30, MISC posted a net loss of RM599mil compared with a net profit of RM1.17bil in the previous corresponding period.
The net loss was due to a provision of RM1.05bil for litigation claims. Its revenue rose by 2.6% to RM6.76bil from RM6.58bil a year ago.
On the outlook, MISC said 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.
Nevertheless, the operating income of the LNG shipping segment continues to be underwritten by the portfolio of long-term charters that are in place.
The crude tanker market continues to be affected by weak tonnage demand, coupled with increased vessel availability from the unwinding of floating storage.
After an exceptionally strong first half-year, freight rates fell sharply and have remained under pressure since. The weak market could persist until the end of 2020, based on the expected rate of oil demand recovery.
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