MISC has announced its financial results for the third quarter ended 30 September 2015 with group revenue for the quarter of RM2505.6 million being 14.9% higher than RM2 180.3 million in the corresponding quarter.
The increase in Group revenue was mainly due to improved freight rates in the Petroleum business. However, a smaller fleet of operating vessels in Chemical business, lower earning days in LNG business and different phases of project construction in Heavy Engineering caused declines in revenue of the respective businesses in the current quarter.
Group operating profit
Group operating profit of RM618.9 million was 27.4% higher than the corresponding quarter's profit of RM485.8 million, mainly from higher revenue in Petroleum coupled with improvement in charter rates in Chemical business. However, LNG business recorded lower operating profit from lower revenue while additional provision for cost to complete an ongoing project caused a decline in Heavy Engineering operating profit.
Group profit before tax of RM519.3 million was higher than the RM510.5 million profit in the corresponding quarter. This is achieved in spite of taking impairment provision of RM232.3 million in the current quarter.
Group revenue for the cumulative 9-months ended 30 September 2015 of RM7596.3 million was 8.4% higher than the RM7009.5 million revenue for the corresponding 9-month period.
Improved freight rates in Petroleum business, revenue recognised from an EPC project in the current period and finance lease income contribution of an FPSO unit which commenced in September 2014 were the main contributors to the increase in Group revenue. However, a smaller fleet of operating vessels in Chemical business, lower earning days in LNG business and different phases of project construction in Heavy Engineering caused declines in revenue of the respective businesses in the current 9-month period.
Group operating profit of RM1754.4 million was 27.8% higher than corresponding period’s profit of RM1 372.5 million, mainly from higher revenue in Petroleum and Offshore businesses and lower operating costs from operating a smaller fleet of vessels in Chemical business. Meanwhile, LNG business recorded lower operating profit from lower revenue while additional provision for cost to complete an ongoing project caused a decline in Heavy Engineering operating profit.
The Petroleum shipping segment continues to enjoy the benefits of market strength in the first half of 2015 into the third quarter of the year, despite the quarter being a seasonally weaker period. This segment is likely to end the year on an equally strong note given the start of the winter season in the Northern Hemisphere, which is seasonally positive for this segment.
The steady performance of the LNG shipping and Offshore business segments of the past nine months will continue into the last quarter of the year on the back of long term contracts both business segments have in place.
However, the outlook and prospects of the Upstream oil and gas industry is projected to remain poor with the prolonged weakness in oil price. The cutback in exploration and production activities will continue to weigh heavily on the offshore construction activities for the Heavy Engineering segment. On a positive note, the segment’s marine repair business is expected to perform steadily for the rest of the financial year and to a limited extent, cushion the weak performance of offshore construction business.
Operationally, the Group is expected to sustain its financial performance for the past 9 months into the final quarter of the financial year 2015. However, the overall performance for the financial year is still subject to potential accounting impact from impairment tests, if any.Adapted from a press release by Louise Mulhall
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/05112015/misc-group-results-q3-2015/