KUALA LUMPUR (Feb 18): MISC Bhd's net profit fell 26.2% to RM249.9 million in the fourth quarter ended Dec 31, 2019 (4QFY19) from RM338.7 million a year ago, on lower share of profit of joint ventures and higher impairment of assets in the current quarter coupled with recognition of a gain on acquisition of a business in 4QFY18.
This resulted in a lower earnings per share of 5.6 sen for 4QFY19 compared with 7.6 sen for 4QFY18.
Revenue for 4QFY19 also fell by a marginal 0.5% year-on-year to RM2.38 billion from RM2.39 billion, mainly due to the lower number of operating vessels in the petroleum segment in the current quarter.
This was offset by the uplift in the liquefied natural gas (LNG) segment following redeployment of vessels previously on charter suspension and acquisition of two LNG carriers in December 2018 and January 2019 respectively.
The group also declared a fourth interim dividend of 9 sen per share amounting to RM401.7 million, as well as a special dividend of 3 sen per share totaling RM133.9 million, for the full year ended Dec 31, 2019 (FY19). Both are payable on March 17.
MISC president and group CEO Yee Yang Chien attributed the special dividend to the group achieving a 36.1% increase in operating cash flow to RM5.58 billion in FY19 from RM4.1 billion in FY18.
"Taking into consideration our current capital commitments and foreseeable new investment opportunities, I am happy that we are able to return some surplus cash to our shareholders in the form of the special dividend that has been announced together with the quarterly dividend," he said in a statement today.
Net profit for the full FY19, meanwhile, rose 8.8% to RM1.43 billion from RM1.31 billion in the previous year, while revenue grew 2.1% to RM8.96 billion from RM8.78 billion in FY18.
On prospects, MISC said the tanker market is widely expected to remain firm in 2020 due to fewer deliveries and growing long-haul prospects, as well as demand growth arising from the International Maritime Organization 2020 sulphur cap implementation.
"However, the recent coronavirus (Covid-19) outbreak has posed some risks to the oil and tanker market, and while the impact is currently uncertain, the tanker market could face short-term headwinds if the outbreak is not contained or if the situation escalates," it added.
In the LNG shipping segment, liquefaction expansion in North America and the Middle East is expected to lead to an increased requirement for vessels and this should support charter rates going forward.
MISC said nonetheless, the group’s present portfolio of long-term charters will underwrite the steady performance of MISC’s LNG business segment, and the two long-term contracts secured in 4QFY19 will provide growth in future years.
"The resurgence in offshore oil and gas (O&G) projects is set to continue its upward trajectory in 2020, with oil prices remaining relatively stable. The floating production system market will likely remain robust
with an increasing number of contract awards in the next few years, and MISC’s offshore business unit will continue to assess the merit of pursuing these opportunities.
"And while there is an increase in offshore activities, the heavy engineering segment remains prudent on the outlook for its business in the near term amid uncertainties on the timing of capital spending by major O&G players," it said.
"Notwithstanding, the heavy engineering segment remains committed to replenish its order book by expanding its footprint in various geographical areas and diversifying into new business opportunities," it added.
At 12.30pm, MISC share price rose one sen or 0.12% to RM8.02, bringing it a market capitalisation of RM35.80 billion. It saw some 790,500 shares exchanging hands.