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MISC's Q1 profit surges on higher freight rates, one-off gains

KUALA LUMPUR, May 24 (Bernama) -- Energy shipping firm MISC Bhd's first-quarter (Q1) net profit jumped by 64.4 per cent year-on-year to RM510.50 million, buoyed by improved freight rates as well as gains of RM41.2 million from a business acquisition and a ship disposal. 

Group revenue was also higher for the quarter ended March 31, 2019, at RM2.28 billion against RM2.02 billion a year earlier, it said in a filing with Bursa Malaysia today.

It attributed the revenue growth to the improved freight rates recorded for Aframax, Very Large Crude Carrier and Suezmax vessels in the petroleum segment.

“Additionally, heavy engineering revenue also increased resulting from higher completion progress of ongoing projects. Higher number of operating vessels in the liquefied natural gas (LNG) segment also attributed to the higher revenue in the current quarter,” it said.

The better freight rates pushed the petroleum business into the black with an operating profit of RM134.9 million compared with a loss of RM39.2 million in the previous year's corresponding period.

The LNG shipping segment, meanwhile, posted a 17.8 per cent increase in operating profit to RM324.2 million. 

On the current-year outlook, MISC said while 2019 as a whole was expected to be a better year for the tanker sector than 2018, it was concerned over continued oil production cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) and the end of Iran oil waivers by the United States, which might affect shipping volumes.

“Over the longer term, growth in tonne-miles that is driven by higher exports from the Atlantic region to Asia suggests a more robust outlook in charter rates. In the LNG shipping segment, spot charter rates eased off in the first quarter 2019 on the back of diminishing winter demand and new tonnage delivery, after a historical winter peak towards the end of 2018.”

In the second half of 2019, tanker deliveries are expected to slow and new liquefaction capacity will likely help keep rates afloat. Two new LNG carriers joined MISC’s fleet at the end of 2018 and early 2019, providing a source of income growth for the segment, the company said.

These additions and the existing portfolio of long-term charters that are in place will underwrite a steady performance for MISC’s LNG business for the year.

The offshore segment, meanwhile, continues to be supported by healthy activities in oil and gas exploration and production.

“An increasing number of opportunities are present in the global offshore exploration and production space, especially for developments within the Atlantic Basin, and MISC’s offshore business unit will be actively assessing the merit of pursuing these opportunities in the current year,” it added.

MISC has approved a first dividend of 7.0 sen per share in respect of financial year 2019 amounting to RM312.5 million.

-- BERNAMA

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