Malaysia: MISC Reports Decrease in Q2 Revenue

MISC announced its financial results for the second quarter ended 30 June 2013.

Group revenue for the quarter ended 30 June 2013 of RM2,284.3 million was 3.2% lower than the RM2,359.1 million revenue in the corresponding quarter. The decrease in Group revenue were mainly attributed to lower revenue in Heavy Engineering from slower progress on certain projects as well as lower revenue in Petroleum business from softer freight rates and a weak market.

Meanwhile, higher revenue in LNG business following commencement of two Floating Storage Units (“FSUs”) in August 2012 and Chemical business from higher freight rates helped to soften the decline in Group revenue.

Group operating profit of RM344.7 million was 31.6% lower than RM504.3 million profit in the corresponding quarter. The decline in operating profit was mainly due to higher operating losses in the Petroleum business. In addition, in the corresponding quarter, the Group had recognised a one-off settlement received from early redelivery of vessels on time charter contracts. Group profit before tax of RM339.6 million was lower than the RM437.9 million profit in the corresponding quarter.

YEAR ON YEAR

Group revenue for the half-year ended 30 June 2013 of RM4,663.7 million was 2.1% higher than the RM4,568.2 million revenue for the half-year ended 30 June 2012 (“corresponding period”). The increase in Group revenue were primarily due to higher revenue in LNG business following lease commencement of two FSUs in August 2012, Heavy Engineering business from commencement of new projects and Chemical business from higher freight rates.

However, lower revenue in Petroleum business from smaller fleet of operating vessels and softer freight rates have negated the revenue increase in LNG and Heavy Engineering businesses.

Group operating profit of RM739.6 million was 5.2% lower than RM780.2 million profit in the corresponding period.

Group profit before tax of RM694.4 million was higher than RM577.3 million profit in the corresponding period. The increase in profit was mainly due to net impairment reversal of RM25.5 million in the current year compared to an impairment charge of RM159.7 million in the corresponding period.

PROSPECTS

Year 2013 is expected to be another challenging year for the shipping industry with soft demand growth, volatile fuel prices and excess shipping capacity. However, long-term contracts in LNG and Offshore businesses continue to provide stability to the Group.