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MISC Q1 profit up 55% to $198m on contributions from associate companies

MISC Q1 profit up 55% to $198m on contributions from associate companies
Malaysia's MISC saw first quarter earnings rise 55% to MYR795.4m ($198.1m) from MYR512.1m in the previous corresponding quarter on gains from associate companies, the shipping company said in a stock market announcement.

MISC said that the earnings rose after the inclusion of contributions from non-controlling interests of MYR224.4m in Q1, 2016, sharply higher than the MYR25.8m seen in the previous corresponding period.

Group operating profit was up 67% at MYR774.8m from MYR463.6m previously. However revenue slipped 4% to MYR2.4bn from MYR2.5bn. 

At the segment level, LNG revenue rose slightly to MYR683.2m from MYR669.1m a year ago, mainly due to the strengthening of US Dollar against the Malaysian Ringgit, the company said.

Segment operating profit however more than doubled to MYR747.8m due to the recognition of compensation for early termination of time charter contracts for two vessels.

Revenue from MISC's petroleum tankers business increased by 27% to MYR1.3bn mainly from improved freight rates in the still relatively buoyant sector. In line with this, segment operating profit jumped to MYR221.4m from MYR36.9 previously, helped by higher revenue in petroleum business.

Other parts of MISC's operations could not escape the wider sector downturns in their respective businesses however. Offshore revenue fell 13% to MYR172.6m and the division fell into a MYR164.5m loss at the operating level compared to a profit of MYR82.4m previously, mainly due to impairment provisions for early termination of contracts for two mobile offshore production units (MOPU) in the current quarter.

The heavy engineering division was also badly affected by the oil and gas downturn and accompanying slowdown in orders, with revenue falling 69% to MYR142.5m from MYR464.2m previously as most of its offshore construction projects are nearing completion and have had most of their value recognised. The segment turned to an operating loss of MYR3.5m in the first quarter from a profit of MYR38.1m a year ago.

Meanwhile some legacy issues from MISC's former life as a

container line remain and continue to impact its financials.

“However, the difficult operating conditions in the container shipping business have greatly impacted the group’s ability to find employment for four container vessels that were previously chartered in for the liner business. This necessitated an additional provision of MYR200.9m for Q1, FY16,” MISC noted.