KUALA LUMPUR: MISC Bhd recorded a net loss of RM1.15 bil for the first quarter ended March 31, 2020, from a net profit of RM510.5 mil recorded in the same period in 2019.
Revenue however rose by 10.4% to RM2.51 bil versus RM2.27 bil, due to higher contributions from all segments except for the offshore segment.
“The heavy engineering segment reported an increase in revenue of RM143.7 mil following higher contribution from ongoing projects coupled with increased conversion work, while higher-earning days brought about by lower dry-docking activities in the current quarter has contributed to an increase in liquefied natural gas’ revenue of RM70.5 mil and improved freight rates in the petroleum segment have generated an increase in revenue of RM54.3 mil,” the shipping company said in a statement.
It noted that the petroleum tanker market had been one of the few segments of the oil industry that enjoyed positive momentum in the first quarter of 2020.
MISC noted that the unexpected price war that erupted between oil producers Russia and Saudi Arabia created a spike in tanker spot rates as demand for shipping surged due to the sudden flood of low-priced oil into the market.
The segment was subsequently supported by high demand for tankers to be used as floating storage amid a slump in global oil demand due to the Covid-19 pandemic.
“While the tanker market remains firm for the moment, the Organisation of the Petroleum Exporting Countries + (OPEC+) coalition agreement to make deep production cuts to support oil prices will eventually lead to reduced demand for tankers.
“Hence, the prospects for the second half of the year are highly uncertain, depending on the duration and magnitude of the pandemic’s impact on oil demand as well as the level of oil supply by OPEC+ and non-OPEC+ producers,” it said.
MISC added that the LNG shipping segment’s financial performance continues to be underpinned by recurring income from its portfolio of long-term contracts while the offshore business segment’s existing long-term contract would continue to support its stable financial performance.
“With the current Covid-19 pandemic and depressed oil price environment, the heavy engineering segment expects the risks of deferments and scale-down of upstream projects to prolong and continue to pose challenges to the industry for the remainder of the year,” it said. – May 8, 2020
