Petroleum and LNG segments impact MISC results

Thursday, 26 November 2020
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MISC Berhad reported revenue for the third quarter of this year of RM2,059.5 mill, which was 4.1% lower than the corresponding quarter’s revenue of RM2,147.8 mill in 3Q19.

This was due to lower contributions from the Petroleum segment following lower freight rates and fewer number of operating vessels in the current quarter.

LNG segment also recorded lower revenue from lower earning days, due to drydockings and offhire of certain vessels in the current quarter.

This reduction however, was softened by higher revenue in Heavy Engineering segment mainly due to higher contribution from on-going heavy engineering projects.

Group operating profit for the quarter was RM330 mill, which was 12.3% lower than the corresponding quarter's operating profit of RM376.4 mill, mainly due to the lower revenue for the LNG and Offshore segments.

Group profit before tax for the quarter was RM281.2 mill, 2.2% lower than the corresponding quarter’s profit before tax of RM287.5 mill, mainly due to the lower operating profit. The decrease was further caused by lower share of profit of joint ventures offset by lower impairment loss on ships, offshore floating assets and other property, plant and equipment, as well as lower finance costs in the current quarter.

Group revenue for the first nine months of 2020 was RM6,759.6 mill, 2.6% higher than the corresponding nine month period revenue of RM6,587.2 mill.

This rise came from higher contributions from all segments except for the Offshore segment. Higher earning days brought about by fewer drydocking activities in the current period contributed to an increase in LNG’s revenue.

Group operating profit for the nine month period was RM1,698 mill, some 16.9% higher than the corresponding nine month period of 2019. This was mainly due to higher margins on freight rates in the Petroleum segment and higher earning days in the LNG segment.

Loss before tax

The Group reported loss before tax of RM678.2 mill, compared to profit before tax of RM1,248.6 mill in the corresponding period. The loss was mainly due to the recognition of provision for litigation claims amounting to RM1,049.2 mill, as well as a write off of trade receivables and loss on re-measurement of finance lease receivables of RM935.2 mill, following the decision by the Arbitration Tribunal on the Group’s arbitration proceeding against SSPC.

In addition, the Group also recorded an impairment loss of RM315.6 mill in the current period mainly on its Heavy Engineering’s asset in light of the current oil and gas downturn, COVID-19 pandemic and the expected prolonged recovery of the industry.

The Group’s cash flow generated from operating activities for the period ended 30th September, 2020 was RM4,491.5 mill, an increase of 8.4% from the corresponding period mainly from higher net inflows in the LNG and Petroleum segments from the improved operating performance.

Furthermore, the healthy cash balance is supported by the steady cash flow generated from the Offshore and LNG segments’ portfolio of long-term contracts. 

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