Malaysia’s MISC reported a drop in net profit in the second quarter due to the effects related to the Covid-19 pandemic, but the company’s LNG business keeps rising.
MISC’s 299.5 million ringgit ($71.3 million) net profit declined 25 percent year-on-year.
The shipping giant attributed the decline mainly due to lower revenue in its heavy engineering segment as the Covid-19 pandemic continues to hit the entire industry.
Aside with that, MISC logged a 1.1 percent rise in revenue to 2.16 billion ringgit and an 8 percent increase in operating profit to 522.9 million ringgit
MISC’s brighter side of the business comes from LNG and petroleum shipping and both of the segments logged a rise in earnings.
LNG revenue increased 5.2 percent to 692 million ringgit while petroleum shipping earnings reached 1.09 billion rising 9.8 percent.
In the January-June period, MISC logged a 959.4 million ringgit ($228.6 million) loss. This is mainly related to a 1.05 billion ringgit provision on litigation claims coming from its legal dispute with Sabah Shell Petroleum, a unit of Shell.
Additionally, the group also recorded an impairment loss of 300 million ringgit in the heavy engineering segment’s property, plant and equipment.
MISC not affected by low spot LNG
LNG spot charter rates remain soft as the Covid-19 pandemic continues to dampen demand resulting in cargo cancellations and output cuts by producers.
MISC says this is expected to persist in the coming quarter as the market enters the seasonal low-demand period.
However, this will have “limited impact” on the steady performance of the group’s LNG business segment as the majority of its vessels are under long-term charters, it said.
The Malaysian shipping firm owned by energy giant Petronas operates a fleet of 29 LNG carriers and two floating storage units.