MISC (Malaysia International Shipping Corporation) second quarter operating profit fell 25 per cent year on year to MYR500.3 million (US$123.8 million), drawn on revenues of MYR2.39 billion, which declined eight per cent.
This was blamed mainly due to higher depreciation in LNG and petroleum businesses from the change in estimated useful life of vessels totalling MYR105.2 million.
The heavy engineering business also recorded lower operating profit in line with the decrease in its revenue while offshore business recorded higher operating profit following completion of the 50 per cent equity buyback of GKL in the current quarter.
"The second quarter showed mixed results that are impacted by lower contribution from our heavy engineering and LNG businesses," said MISC president and CEO Yee Yang Chien.
"Moving forward, we expect no less than a challenging year ahead with the current slump in the global oil and gas sector. However, our priorities remain unchanged and the future growth of MISC will be guided by our five-year business strategy towards attaining a sustainable level of secured profits by FY2020," he said.
To do this, he said, the company would focus on advancing the growth of four core business segments in LNG, petroleum, offshore and heavy engineering.
He also said high global stock level is expected to dampen demand for the movement of crude oil in the immediate term.
Coupled with projected larger delivery of new petroleum tankers in second half of 2016, freight rates may come under some pressure. However, this will be compensated by rising seasonal demand towards the end of the year, said the company statement.
"Meanwhile, the market for LNG vessel spot charter remains weak due to the escalating oversupply of vessels. This negative outlook is expected to remain throughout the year. On a positive note, the group's present portfolio of long term charters that are in place will underwrite a steady financial performance for MISC's LNG fleet for the rest of the year," it said.
"As upstream activities in the oil and gas sector stay extremely sluggish in view of the low oil price environment, prospects of new tenders and projects remain poor," said the company statement.
MISC Berhad (MISC), a subsidiary of PETRONAS, was incorporated in 1968 and is a world leading provider of international energy shipping and maritime solutions.
The principal businesses of the group comprise energy shipping and its related activities, owning and operating offshore floating solutions, marine repair and conversion, engineering and construction works, maritime education and training.
Source : HKSG.