Among individual sectors, offshore did the best, as expected, as the gains started to flow in from the full consolidation of Gumusut-Kakap Semi-Floating Production System (L) (GKL) and recognition of one-time gain for GKL from variation works following a favourable decision of the adjudication as well as lease commencement of Marginal Marine Production Unit in the fourth quarter of FY2016.
Revenue jumped to MYR734.7m from MYR191.7m previously and segment pre-tax profit rose to MYR302.1m compared to a loss of MYR164.5m in the previous corresponding quarter, the company said in a stock market announcement.
MISC attributed the gains to higher revenue from GKL and recognition of construction gain from FSO Benchamas 2 compared to losses previously mainly due to write-off of finance lease receivables following early termination of contracts for two Mobile Offshore Production Units.
LNG revenue rose 9% to MYR746.5m from MYR683.0m mainly due to lease commencement of two new vessels, MISC said. Segment pre-tax profit, however, fell by more than half to MYR330.0m from MYR747.8m mainly due to higher figures in the previous corresponding quarter due to recognition of compensation for early termination of time charter contracts for two vessels.
The petroleum segment's revenue of MYR1.29bn was almost flat from MYR1.27bn previously, largely because of the strengthening of the US Dollar against Malaysian Ringgit.
As a result pre-tax profit fell 63% to MYR82.6m from MYR221.4m, mainly from lower freight rates and higher bunker costs incurred.
Predictably, the laggard was the heavy engineering segment where revenue slid 8% to MYR235.9m from 256.7m, without the benefit of one-off revenue and contributions from finalisation of carried forward projects in the Marine sub-segment that was recognised in the first quarter of 2016.
Pre-tax loss widened to MYR15.6m from MYR3.5m, without the extraordinary gains.
Looking ahead, MISC said: "Vessel oversupply is expected to persist in the LNG shipping market as heavy delivery of new LNG vessels continue into 2017. LNG charter rates are expected to remain soft in the near-term as the oversupply situation is also exacerbated by a significant number of older LNG tankers coming off charters."
MISC pointed out however that its present portfolio of long term charters would support the steady financial performance of its LNG business segment.
MISC sees a similar tonnage oversupply situation in the petroleum shipping market with a considerable number of newbuild deliveries across the vessel segments in 2017 outpacing demand growth in the sector.
"Petroleum tanker charter rates are expected to fluctuate with the seasonal demands and averaging lower than the prior year," MISC warned.
On terms of the offshore segment, MISC expected that as the oil market rebalances, a more stable oil price environment will pave the way for a gradual recovery in global offshore oil and gas investments.
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