Malaysia's MISC Slips into red in Q1

Malaysian shipowner MISC, a unit of state-run Petronas, recorded a net loss of ringgit 1.15bn ($270mn) for the three months to March 31, from a net profit of ringgit 510.50mn in the year-ago period, it said on May 8 in a statement.

The company slipped into the red owing to provisions put aside for litigation claims, following a decision by an arbitration tribunal relating to its legal case with Sabah Shell Petroleum, it said.

Revenue rose by 10.4% yr/yr to ringgit 2.51bn, however, due to higher contributions from all segments except for the offshore segment. The heavy engineering segment reported an increase in revenue of ringgit 143.7mn following higher contribution from on-going projects coupled with increased conversion work. An increase in earning days brought about by lower dry-docking activities in the quarter led to a growth in the LNG segment’s revenue of ringgit 70.5mn while improved freight rates in the petroleum segment have generated an increase in revenue of ringgit 54.3mn.

Looking forward, MISC said that the LNG shipping segment’s financial performance continued to be underpinned by recurring income from the portfolio of long-term contracts.

“Meanwhile, in the spot market, LNG shipping rates have been dipping due to the end of the peak winter season and exacerbated by a slowdown in Asian LNG demand amid the Covid-19 outbreak, a mild winter in Asia and high inventories,” it said. “This is expected to persist in the second quarter of 2020 as the market enters the seasonal low-demand period. The weak global economy coupled with low LNG prices could cause delays in planned LNG projects, which may lead to slower fleet growth.”

The outlook for marine repairs and dry-docking activities also remain uncertain with demand for LNG expected to experience a slowdown due to a significantly weakened economic outlook, the company said.