MISC Q1 profits down despite increased revenues

Malaysian ship owner saw operating profits fall 7.2% despite an 8.7% increase in group revenues.    MISC Group reported operating profits of 468.2 million Malaysian ringgit (U.S. $131.27 million) for the first quarter of 2015, a 7.2 percent decrease from the first quarter of 2014.
   The Malaysian ship owner attributed the decline in profits primarily to lower revenue in its liquid natural gas business and additional costs from heavy engineering projects. Higher profit in the MISC’s offshore business and lower losses in its chemical business helped to mitigate the decrease in group operating profit, according to the company’s most recent financial statements.
   Group revenues were up 8.7 percent to 2.49 billion for the quarter, thanks to improved freight rates in MISC’s petroleum business and the commencement of finance lease income from its Floating, Production, Storage and Offloading (“FPSO”) unit in September 2014.  
   According to the company, MISC’s financial performance in 2015 “will continue to be underpinned by secured recurring income from a portfolio of long term contracts in the LNG shipping and offshore business segments.
   “Despite the severe drop in global oil prices in the past few months, petroleum shipping segment has found strength from sustained global oil production,” MISC said. “Barring any material cutbacks in global oil production, the recent strength in petroleum shipping could be sustained for the year. Chemical shipping prospects remain mixed given uncertainty in demand as a result of sluggish growth in certain economic zones.
   “However, it will be a challenging year for the oil and gas services segment, such as fabrication and construction given the reduction in capital and operating expenditures by major oil companies in a low oil price environment,” it added. “The group’s heavy engineering business will draw on its present order book along with other cost management and operational excellence initiatives to sustain profitability during the year.”