MISC 4Q net profit down 26%, declares 12 sen dividend

KUALA LUMPUR (Feb 18): MISC Bhd's net profit for the fourth quarter ended Dec 31, 2019 (4QFY19) fell 26.22% to RM249.9 million from RM338.7 million a year earlier.

The weaker earnings were caused by widening operating loss in other segments in 4QFY19; higher impairment loss on ships and offshore floating assets; other investment and finance costs as well as a lower share of profit of joint ventures.

Quarterly revenue inched down 0.54% to RM2.38 billion versus RM2.39 billion previously, said MISC in a Bursa Malaysia filing. Earnings per share fell to 5.6 sen from 7.6 sen a year earlier.

MISC declared a dividend of nine sen per share and a special dividend of three sen per share, to be paid on March 17, bringing total dividends for FY19 to 32 sen, which was higher compared with 29.40 sen in FY18.

For the financial year ended Dec 31, 2019 (FY19), MISC's net profit rose 8.84% to RM1.43 billion from RM1.31 billion a year earlier, while revenue for FY19 rose 2.08% to RM8.96 billion from RM8.78 billion in FY18.

Commenting on its prospects, MISC said the shipping segment was able to reap some of the benefits of the robust albeit volatile market and ended the year on a stronger note.

On the tanker market front, it expects it to remain firm in 2020 due to fewer deliveries and growing long-haul prospects as well as demand growth arising from the international maritime organisation 2020 (IMO 2020) sulphur cap implementation.

“However, the recent Covid-19 virus outbreak has posed some risks to the oil and tanker market, and while the impact is currently uncertain, the tanker market could face short-term headwinds if the outbreak is not contained or if the situation escalates,” it noted.

"Growth in seaborne oil demand is expected to be impacted by the recently announced OPEC-led production cuts, and geopolitical uncertainty continues to cloud future energy demand.

For its LNG shipping segment, MISC said the spot rates ended the year lower compared with the previous year mainly due to lack of demand, owing to mild winter and high inventories.

“However, liquefaction expansion in North America and the Middle East is expected to lead to an increased requirement for vessels and this should support charter rates going forward. Nonetheless, the group’s present portfolio of long-term charters will underwrite the steady performance of MISC’s LNG business segment, and the two long-term contracts secured in 4Q 2019 will provide growth in future years,” it added.

Meanwhile, MISC said it remains prudent on the outlook for its heavy engineering segment in the near term amid uncertainties on the timing of capital spending by major oil and gas players despite there being an increase in offshore activities.

For its marine business, MISC said it is cautiously optimistic on the business outlook in view of the expected global LNG expansion driven by an increase in exports from Qatar, Australia, Russia and the US to the Asia-Pacific market and it expects no further deferment of dry-docking activities by ship owners in 2020 in relation to IMO 2020’s implementation.

“Notwithstanding, the heavy engineering segment remains committed to replenish its order book by expanding its footprint in various geographical areas and diversifying into new business opportunities,” it added.

At 12.30 pm, MISC share price rose one sen or 0.12% to RM8.02, bringing it a market capitalisation of RM35.80 billion. It saw some 790,500 shares exchanging hands.