MISC today reported its financial results for the second quarter ended 30 September 2011.
Quarter on quarter, the Group revenue of RM2,617.8 million was 15.1% lower compared to the previous corresponding quarter of RM3,085.2 million. The decline in Group revenue was mainly due to transfer of certain heavy engineering projects undertaken in Turkmenistan to a jointly controlled entity, MMHE-TPGM Sdn. Bhd., following the Turkmenistan Government’s approval in December 2010 for registration of the Company.
Depressed aframax freight rates in Petroleum business, lower liftings in Liner business (container shipping) as well as higher bunker costs have resulted in a 38.4% drop in the profit before tax to RM256.4 million, from RM416.3 million in the corresponding quarter. This excludes impairment provisions of RM27.2 million.
Similarly, on a year to date basis, the Group revenue of RM5,627.2 million was 11.5% lower than RM6,355.7 million in the previous corresponding year following transfer of certain heavy engineering projects in Turkmenistan to MMHE-TPGM Sdn. Bhd., and lower liftings in the liner business.
The Group profit before tax of RM457.0 million (excluding impairment provisions of RM27.2 million) was 48.5% lower than RM887.6 million profit in the previous corresponding year. Lower liftings in Liner business, lower freight rates in Petroleum business and higher bunker costs were the main causes of the drop in profitability.
In comparison to the preceding quarter, the Group revenue of RM2,617.8 million was 13.0% lower than RM3,009.3 million in the first quarter ended 30 June 2011. Despite lower revenue, profit before tax increased by 27.8% from improved performance in Heavy Engineering segment.
MISC Group Balance Sheet
Group balance sheet remains strong as at 30 September 2011, evidenced by increase in both its equity and total assets by 4.4% and 10.0% respectively since the previous financial year ended 31 March 2011.
PROSPECTS
Secured long term contracts in LNG and Offshore businesses together with relatively steady revenue and margins in Heavy Engineering continue to provide stable income stream to the Group to compensate the weak market conditions expected for the Liner, Petroleum and Chemical businesses.
In light of the Company’s decision to exit its Liner business operations, as announced today, the estimated one-off costs to the income statement are expected to be approximately USD400 million for the financial year ending 31 December 2011.
As a result, the Group is anticipated to incur losses for the current financial year ending 31 December 2011.
1 Malaysian ringgit = 0.313824 U.S. dollars
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LNG World News Staff, November 24, 2011; Image: MISC