KUALA LUMPUR (May 6): MISC Bhd swung back into profitability in the first quarter ended March 31, 2021 (1QFY21) with a net profit of RM429.8 million, from a net loss of RM1.12 billion in the previous year’s corresponding quarter as the shipping company did not record any litigation claims.

As a result, earnings per share rebounded to 9.6 sen from a loss per share of 25.9 sen.

In a filing to the local bourse today, the group highlighted its quarterly revenue rose marginally by 1.1% to RM2.54 billion against RM2.51 billion a year ago, largely underpinned by higher contributions from its offshore business. 

The group also has declared an interim dividend of seven sen to its shareholders, to be paid on June 9, 2021. The entitlement date falls on May 25.

On a quarter-on-quarter (q-o-q) basis, the shipping company’s net profit was down by 22.7% from RM556.5 million in the preceding quarter while revenue declined by 3.8% from RM2.64 billion on the back of lower revenue from ongoing projects and lower number of vessels secured for repair and maintenance works in the marine and heavy engineering segment in 1QFY21. 

Meanwhile, the group highlighted its liquefied natural gas (LNG) shipping market witnessed a decline in spot charter rates in February and March this year due to weakening global spot trade as seasonal winter demand in Asia eased. 

“This has been aggravated by a large wave of newbuild LNG carriers being delivered.

“If this situation persists, spot charter rates could potentially fall further in the near term but there could be some potential upside if countries start stockpiling earlier in the summer for the winter months,” it said. 

MISC also said the recent blockage of Suez Canal has had a temporary positive impact on spot rates. 

“Although tanker rates for smaller vessels are rebounding, some of the larger tankers continue to record low freight earnings. On the supply side, demolition has not picked up pace despite the disappointing freight rates during the quarter,” it added. 

Moving forward, as oil price climbs back to pre-pandemic levels, the recovery in the oil and gas sector is expected to pave the way for an increase in activity levels in the global offshore exploration and production space. 

Hence, the group said its offshore business segment will be very selective on growth opportunities as it focuses on the execution of the new floating, production, storage and offloading (FPSO) project in hand. 

“For the marine and heavy engineering segment, aligned with the recent recovery in oil price, several deferred projects have since been revived and its efforts to replenish its order book have generated positive results with the recent award of the EPCIC contract for the SK408W Jerun Development Project, offshore Sarawak.

“Nevertheless, the volatile industry condition and the wider lingering effects of the Covid-19 pandemic remain major risks moving forward.

“Meanwhile, the prospects of acquiring more marine repair projects are highly dependent on the reopening of borders and worldwide recovery from the Covid-19 pandemic,” it said. 

At noon break today, shares of MISC traded two sen or 0.3% higher at RM6.70, valuing the company at RM29.86 billion.