MISC Group has reported a significant increade of their third quarter profit. Tonnage oversupply in the petroleum and oil shipping markets remains a challenge.
Group revenue for the quarter ended 30 September 2017 of 2,315.8 mill. RM was 1.0 % higher than the corresponding quar[ds_preview]ter‘s revenue of 2,292.8 mill. RM. The increase was mainly contributed by the lease commencement of three new LNG vessels delivered in October 2016, January 2017 and August 2017. Additionally, the offshore segment also contributed to the increase in revenue with the favourable adjudication decision on Gumusut-Kakap Semi-Floating Production System Limited (GKL) variation works and construction revenue from Floating, Storage and Offloading Vessel (FSO) »Benchamas 2« that commenced construction in January 2017.
The increase in Group revenue was dampened by the lower earning days and freight rates for Petroleum segment as well as lower revenue from Heavy Engineering segment as most on-going projects are nearing completion. The operating profit of 678.1 mill. RM was higher than the corresponding quarter‘s operating profit of 310.7 mill. RM. Profit before tax of 706.2 mill. RM was higher than the corresponding quarter‘s profit before tax of 154.6 mill. RM.
The group revenue for the nine months period ended 30 September 2017 of 7,603.2 mill. RM was 7.4% higher than the corresponding period of 2016 (7,079.7 mill. RM). The Group operating profit for the 9 months period of 2,076.8 mill. RM was 16.2% higher than the corresponding 9 months period ended 30 September 2016 operating profit. Group profit before tax for the period of 1,961.5 mill. RM was 15.1% lower than the corresponding period profit before tax.
New tankers put pressure on market
According to MISC, petroleum shipping demand continues to be affected by global production cuts in response to high crude inventory levels and low oil prices. This has also been exacerbated by the delivery of new tankers during the year. On the LNG shipping front, spot charter rates are expected to remain sluggish as a result of the tonnage oversupply situation led by higher vessel deliveries and older vessels coming off charter.
MISC expects a more stable oil price environment to pave the way for a gradual recovery in investments in the global offshore exploration and production space, especially for developments within the Atlantic Basin. Meanwhile, the Heavy Engineering business segment remains committed to managing costs, optimising its resources and improving operational efficiency to combat the challenging environment.
