Malaysian MISC's 2018 Profit Drops

Malaysian shipowner MISC February 22 reported almost 36% decline in the net profit for twelve months to December 31 owning to lower revenue, higher bunker costs incurred in the petroleum segment and close-out of completed projects in the prior year.

MISC’s 2018 net profit was ringgit 1.28bn ($310mn) versus ringgit 1.99bn in the previous year, it said. Total revenue for the year dropped 12.8% to ringgit 8.78bn thanks to lower revenue recorded in the LNG, petroleum and offshore segments.

Net profit for the three months to December 31 (4Q2018), however, jumped six-fold to ringgit 327mn, from ringgit 47mn in the same period of 2017, owing to lower impairment losses, it said.

MISC expects 2019 to be another challenging year. “Growth in seaborne oil demand is expected to be impacted by the recently announced OPEC-led production cuts, and geopolitical uncertainty continues to cloud future energy demand,” it said.

The LNG segment is expected to continue to benefit from the market strength seen in 2018 going into 2019, supported by demand growth in Asia, additional supply from new liquefaction projects and slower LNG fleet growth in 2019, MISC added. “While the LNG spot rates reached a multi-year peak in late 2018, the sustainability of such rates remain uncertain in 2019. Nevertheless, the existing portfolio of long-term charters that are in place will underwrite a steady performance for MISC’s LNG shipping unit into the next financial year,” it said.

Company’s offshore segment continues to be supported by healthy activities in oil and gas exploration and production. “An increasing number of floating production system contract awards are forthcoming in the next few years and MISC’s offshore business unit will be actively pursuing these opportunities,” it said.