KUALA LUMPUR: MISC Bhd views the outlook for the marine business is expected to remain challenging as shipyards strive to capture opportunities in order to maximise utilisation amidst stiff competition in a volatile market.
The company in a statement also noted that while there is an increase in offshore activities, the Marine & Heavy Engineering segment maintains its vigilance on the outlook for its business in the near term due to the uncertainty on the timing of capital spending by major oil and gas players. Earnings-wise, MISC reported a 3.7 per cent lower revenue of RM2.14 billion for the third quarter (3Q) ended 30 September 2019 as compared to RM2.22 billion same quarter last year. The decrease in Group revenue was due to a one-time reimbursement cost on towing and installation of a project in the offshore segment recognised in the corresponding quarter.
Additionally, revenue for heavy engineering segment also decreased resulting from post sail away projects and lower cost plus revenue following completion of the main contract in the current quarter. MISC's petroleum segment recorded lower revenue due to the lower number of operating vessels in the current quarter.
President and group chief executive officer Yee Yang Chien said the strength and resilience of MISC's core businesses have contributed stable financial performance for this quarter and will pave the way towards a positive financial close in 2019. "Across the MISC group, we have been very consistent in pursuing our value creation strategy of investing in assets on demand for long term charters to premium customers that will underpin a predictable and sustainable annual operating cash flow while consistently funding new growth opportunities," he said in a statement today.
MISC also noted that the decrease in Group revenue was softened by the uplift in the liquefied natural gas (LNG) business segment which was contributed by higher number of operating vessels in the current quarter following lower dry-dockings and acquisition of two (2) LNG carriers, each in December 2018 and January 2019.
Group operating profit of RM376.4 million was RM21.9 million higher than the corresponding quarter's profit of RM354.5 million due to the higher margin on freight rates in the petroleum segment as well as higher revenue contribution from the LNG business segment. Heavy engineering segment recorded lower operating loss mainly due to the cost incurred for conversion work in its marine sub-segment in the corresponding quarter.
Group revenue for the 9 months period ended 30 September 2019 of RM6.58 billion was 3.1 per cent higher than RM6.39 billion posted in the same period in 2018. The increase in revenue was mainly from higher number of operating vessels in the LNG business segment following lower dry-dockings and acquisition of two (2) LNG carriers, each in December 2018 and January 2019.
"We are pleased to see a lot of projects that were previously under consideration have now come to life especially in the recent months which bodes well to sustain the momentum of our healthy financial growth.
"We are hopeful of ending financial year 2019 on a high note with a few more projects secured, after our successful tender for the LNG tanker time charter contracts with SeaRiver Maritime (a wholly-owned subsidiary of Exxon Mobil Corporation) for 2 vessels for a period of 15 years. MISC hopes to build on that momentum of growth from now into 2020," Yee said.
Notwithstanding, MISC's Heavy Engineering segment is cautiously optimistic on the recovery of the industry and shall continue to focus on replenishing its order book in various geographical areas as well as diversifying into new businesses.
Source: New Straits Times