The decrease was mainly due to lower freight rates and earning days for the petroleum segment, as well as lower revenue from heavy engineering segment, as most on-going projects are nearing completion.
The consolidation of Gumusut-Kakap Semi-Floating Production System (GKL) following completion of its equity buyback in May, 2016 and higher variation works following GKL's favourable adjudication decision mitigated the decrease in revenue for the current quarter.
In addition, construction revenue from the FSO ‘Benchamas 2’ and lease commencement of Marginal Marine Production Unit (MaMPU) in 4Q16 have also contributed to the increase in revenue in the offshore segment. Furthermore, lease commencement of two new LNGCs have also mitigated the decrease in revenue mentioned above.
A group operating profit of RM717.4 mill was higher than the corresponding quarter's profit of RM500.3 mill, mainly due to recognition of compensation for early termination of a timecharter contract and lease commencement of two new LNGCs.
Group profit before tax of RM558.7 mill was lower than RM1,374.1 mill reported in 2Q16, as the latter included net gain on acquisition of subsidiaries of RM847.3 mill, recognition of intangibles of RM47.5 mill and higher share of profit from joint ventures.
For the first half of this year, MISC’s revenue was RM5,287.4 mill, which was 10.5% higher than 1H16 revenue of RM4,786.9 mill.
This increase was mainly due to the reasons listed above. However, Petroleum and Heavy Engineering segments recorded lower revenues over the six month period. Petroleum segment suffered from lower freight rates and earnings days, whilst Heavy Engineering as most major projects were nearing completion, while new secured projects were still at their early stages, as well as lower value of LNGC repairs.
Group operating profit for 1H17 of RM1,398.7 mill was 5.2% lower than 1H16’s operating profit of RM1,475.9 mill, as the latter included recognition of compensation for early termination of timecharter contracts for two LNGCs.
MISC’s group profit before tax of RM1,255.3 mill was 41.7% lower than for 1H16 when RM2,154.9 mill was recorded. This was mainly due to corresponding period's profit, which included a net gain on acquisition of subsidiaries of RM847.3 mill, recognition of intangibles of RM47.5 mill and higher share of profit from joint ventures.
MISC's president/group CEO, Yee Yang Chien, said; "Amidst difficult market conditions, the recent positive accomplishments during the second quarter of 2017 reflect MISC's resilience in demonstrating positive financial results and excellent operational performance. We aim to continue to drive for sustainable growth, guided by our five-year business plan - MISC2020.
"Despite the prevailing challenges in both the oil and gas as well as the shipping industry, MISC continues to record positive developments, focusing our growth on our portfolio of maritime and offshore related assets that are secured under long term employment/contract with quality customers/counterparties.
“Our strong financial position allows us to allocate our capital and human resources towards building value in our existing businesses, as well as in strengthening the quality of our income. Nonetheless, we shall continue to remain vigilant on cost management. As we strive to fulfill our aspiration of consistently providing better energy-related maritime solutions and services, MISC will capitalise on timely investment opportunities to ensure we are able to grow in a more energised and sustainable manner," he added.