This article first appeared in The Edge Financial Daily on February 14, 2018

KUALA LUMPUR: MISC Bhd’s fourth-quarter (4Q) net profit tumbled 87.1% to RM68.2 million from RM529.8 million a year ago, dragged mainly by higher impairment loss of RM553.9 million in the current quarter under review.

Earnings per share fell to 1.5 sen in 4Q of financial year 2017 (4QFY17) from 11.9 sen in 4QFY16. Quarterly revenue slid 3.3% to RM2.43 billion, from RM2.52 billion in 4QFY16, due to lower revenue across its operations except for its liquefied natural gas (LNG).

Nevertheless, the shipping firm declared a fourth interim dividend of nine sen per share for the financial year ended Dec 31, 2017 (FY17), payable on March 15. This brings total dividends for the year to 30 sen per share, unchanged from FY16.

For the full FY17, MISC’s net profit came in 23.2% lower at RM1.98 billion, from RM2.58 billion in the previous year, also largely due to impairment loss of RM687.5 million for the year compared with RM358.8 million in FY16.

Also dragging the numbers in the year were the absence of net gain on acquisition of subsidiaries amounting to RM856.2 million in FY16.

However, revenue rose 4.6% to RM10.04 billion in FY17 from RM9.6 billion in FY16, with higher contribution from its LNG and offshore operations mitigating the slight decline in its petroleum and heavy engineering operations.

On prospects, MISC said the oversupply of tonnage and the cut in global oil production by Opec in 2017 will continue to weigh on the petroleum shipping segment in 2018.

“Similarly, the LNG shipping segment faces an ongoing tonnage oversupply situation and the difficult market will persist in 2018. The lack of short-term positive indicators suggests another challenging year,” it added.

Although the low level of project approvals in 2017 will not translate into more activities for the offshore market in 2018, MISC noted a recovery in oil price will likely drive the global revival of upstream projects.

“Assuming final investment decisions are taken during 2018, it will shape a robust and healthier outlook for 2019,” it said.