KUALA LUMPUR (Nov 14): MISC Bhd (KL:MISC) said on Thursday its net profit fell in the third quarter, dragged by lower charter rates for its natural gas carriers and higher vessel operating costs, as it flagged a tough outlook for its key business.

Net profit for the three months ended Sept 30, 2024 (3QFY2024) dropped 21% to RM338.9 million from RM430.4 million in 3QFY2023, as revenue fell 12% to RM2.96 billion from RM3.37 billion on lower billings in its offshore construction business.
Outlook for liquefied natural gas (LNG) shipping spot rates moving into the fourth quarter and beyond remains “softer, driven by a high number of vessel deliveries, limited additional liquefaction capacity, and moderate anticipated demand in Europe”, MISC flagged.

The company, which owns one of the world’s largest fleet of LNG carriers, declared a dividend per share of eight sen, higher than the seven sen it announced in 3QFY2023.

The group’s LNG shipping division reported a 39.8% drop in operating profit to RM257.7 million from RM427.9 million, hurt by lower earning days from contract expiries and lower charter rates. Revenue fell 21.7% to RM674.2 million from RM860.6 million.

The petroleum and product shipping business, meanwhile, recorded an operating profit of RM338.4 million in 3QFY2024, up 14.2% from RM296.2 million in 3QFY2023, helped by lower vessel operating costs. Revenue dipped 4.1% to RM1.16 billion from RM1.21 billion, primarily due to the translational impact from the ringgit’s strengthening.

The offshore business posted an operating loss of RM33.2 million versus an operating profit of RM58.1 million previously, as revenue fell 58.8% to RM253.5 million from RM361.9 million due to lower project progress on the conversion job of a floating, production, storage and offloading (FPSO) unit.

The marine and heavy engineering division achieved an operating profit of RM20.7 million as opposed to an operating loss of RM100.3 million previously, mainly due to project close-out and the favourable impact from project hedging. Revenue increased 42% to RM906.5 million from RM638.5 million.

For the first nine months ended Sept 30, 2024 (9MFY2024), MISC’s net profit rose 9.6% to RM1.64 billion from RM1.49 billion in 9MFY2023, mainly driven by higher margin in the petroleum and product shipping segment and recovery claims recognition, which offset additional cost provisions in the marine and heavy engineering segment and lower profit in its offshore and LNG shipping division. Cumulative revenue, however, dipped marginally to RM9.93 billion from RM9.99 billion.

On prospects, MISC said its LNG shipping division could face potential asset impairment risks as softer charter rates may affect the long-term value of assets. It also flagged heightened geopolitical tensions disrupting certain contractual arrangements which may have an adverse financial impact.

It plans to mitigate that by continuing to pursue strategic opportunities, including repurposing vessels into floating solutions and redeploying them to charter parties where feasible.

For its petroleum and product shipping segment, it expects operating income to remain steady, underpinned by its fleet of long-term chartered vessels and the potential to capitalise on opportunities in the spot trading market.

“The overall tanker market outlook remains supported for the rest of the year driven by strong growth in long-haul Atlantic-Asia trade as well as limited fleet growth,” it noted.

As for its offshore business, the medium-term outlook remains positive supported by stable oil prices, it said, as it highlighted newbuild FPSO demand coming from the South America, West Africa and the Asia-Pacific regions.

On its marine & heavy engineering segment, it aims to advance its growth by capitalising on opportunities in both conventional and new energy sectors, vessel conversion projects as well as repair and maintenance services for LNG vessels.

Shares of MISC traded one sen or 0.1% lower at RM7.95 during Thursday’s afternoon break, giving it a market capitalisation of RM35.49 billion. The stock has risen 9.05% this year.