Malaysian shipping group MISC Berhad ended the first quarter of the calendar year 2018 with its net profit slashed by more than 50 percent.
The company posted a net income of RM 310.6 million (USD 78.6 million) in Q1 2018, a decrease of 54 percent when compared to RM 676.2 million (USD 171.1 million) seen in the corresponding quarter of 2017.
Revenue also dropped to RM 2.02 billion in the three-month period ended March 31, 2018, from RM 2.98 billion recorded in the same quarter a year earlier.
As explained, the decrease in revenue was mainly due to weaker performance of the company’s offshore segment. Specifically, the corresponding quarter’s revenue included recognition of one time gain for Gumusut-Kakap Semi-Floating Production System (L) Limited (GKL) from variation works following favorable adjudication decision.
Lower freight rates in the petroleum segment, as well as the lower number of operating vessels and charter rate from contract renewal in the LNG segments, further dampened the group revenue in the quarter ended March 31, 2018.
Furthermore, heavy engineering segment also recorded lower revenue mainly due to completion of projects whilst new secured projects are still in their early stages, according to MISC.
The company expects that the petroleum and LNG shipping segments will face a challenging 2018. In addition, performance of heavy engineering segment for 2018 is expected to remain under pressure. However, the group believes a more stable and higher oil price environment in 2018 will pave the way for a gradual recovery in global offshore oil and gas investments.
“2018 is expected to be another difficult year, nonetheless, the recovery of oil price will benefit the offshore sector the most and we are positive on the opportunities available on the upstream deepwater projects locally and globally. For LNG shipping, our present portfolio of long-term charters will support the steady financial performance of this segment,” Yee Yang Chien, MISC’s President/Group Chief Executive Officer, explained.
“Overall, we remain optimistic on long-term prospects and our focus remain on ensuring the successful execution of our 5-year business strategy towards attaining a sustainable level of secured profits by FY2020,” MISC President and CEO concluded.