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MISC posts flat Q1 profit

MISC posts flat Q1 profit
The tough year ahead for the energy sector is starting to be felt, with Malaysia's MISC posting flat profits for the first quarter due to lower revenue from the LNG business and additional costs from some heavy engineering projects, it said in a stock market announcement.

Net profit was basically unchanged at MYR486.3m ($136.8m) from MYR 486.4m in the previous corresponding quarter while revenue rose very slightly to MYR2.49bn from MYR2.29bn previously.

Revenue increased due to better freight rates in petroleum business and the start of finance lease income of a floating, production, storage and offloading unit in September 2014. However, MISC added that it expects this year to be a challenging one for the oil and gas services segment, given the decline in capital and operating expenditures by major oil companies in a low oil price environment. To sustain the profitability for the year, the group’s Heavy Engineering business would need to build up its orderbook while also keeping up with cost management and operational excellence initiatives.“

However, higher profit in offshore business and lower losses in chemical business helped to mitigate the decrease in group operating profit,” MISC said.

However, lower earnings days in LNG business and a smaller fleet of operating vessels in chemical business moderated the rise in revenue. Revenue at MISC’s other energy business jumped 16.7% to MYR661.6m compared to MYR566.9m a year ago due to higher revenue from offshore business and project construction in heavy engineering.

Moving forward, for the current financial year, MISC said the financial performance would be cushioned by secured recurring income from long terms contracts in the LNG shipping and offshore business segments. MISC added that it believed the strength in petroleum shipping could be sustained this year due to sustained global oil production. However, due to uncertain demand, chemical shipping prospects remain mixed.