KUALA LUMPUR (Aug 23): MISC Bhd's (KL:MISC) second quarter net profit rose 19.43% from a year earlier mainly due to higher profit in the marine and heavy engineering segment, amid the absence of additional cost provisions recognised in the corresponding quarter and cost recovery claims in the current quarter.

Its petroleum and product shipping segment also helped boost net profit for the three months ended June 30, 2024 (2QFY2024) to RM540.90 million from RM452.90 million a year ago.

Earnings per share was 12.1 sen in 2QFY2024, from 10.1 sen in the same quarter last year, according to the shipping group’s filing on Friday.

Revenue, however, dropped 6.2% to RM3.33 billion in 2QFY2024, from RM3.55 billion in the quarter a year ago, mainly due to lower revenue from ongoing projects in the marine and heavy engineering segment, coupled with lower earning days from contract expiries and lower charter rates in the gas assets and solutions segment.

The group has proposed a second interim dividend of eight sen per share, amounting to RM357.10 million, to be paid on Sept 26. This brings its year-to-date dividend to 16 sen per share for FY2024.

The petroleum and product shipping business recorded an operating profit of RM402.2 million in 2QFY2024, an increase of 23.7% from RM325.2 million in 2QFY2023, driven by higher margin.

The segment's revenue was 7.8% higher at RM1.31 billion against RM1.22 billion, on the back of higher freight rates and earning days achieved in the latest quarter.

For the first half ended June 30, 2024 (1HFY2024), MISC’s net profit rose 22.05% to RM1.30 billion, from RM1.07 billion in the same period last year, mainly driven by the recovery claims recognition and higher margin in the petroleum and product shipping segment — which offset the additional cost provisions due to the revised schedule for ongoing projects in the marine and heavy engineering segment.

The first half’s revenue grew 5.12% to RM6.97 billion, from RM6.63 billion in 1HFY2023, due to higher revenue from ongoing heavy and engineering projects, as well as higher freight rates and earning days in the petroleum and product shipping segment.

Despite the slow liquefied natural gas shipping market in the latest quarter, MISC expects this segment to remain favourable as spot rates are expected to increase due to seasonal demand and potential winter restocking.

The group also expects its gas assets and solutions segment to sustain its operating income on the back of long-term charters. MISC is also positive on the petroleum shipping market segment despite the softer very large crude carrier rates, with increasing long-haul exports and low fleet growth.

“The overall tanker market outlook remains positive with increasing long-haul exports from the US, Brazil and Guyana and low fleet growth,” it added.

In a separate statement, MISC president and group chief executive officer Zahid Osman said, “MISC Group’s performance in the second quarter of 2024 reflects our strategic resilience and adaptability in navigating complex market conditions. Despite facing some headwinds, our diversified portfolio and focus on operational excellence have enabled us to achieve commendable results.

"As we progress through the year, we remain dedicated to leveraging growth opportunities across our key segments, ensuring that we continue to deliver sustainable value for our stakeholders while advancing our commitment to a just energy transition.”

At noon break on Friday, shares of MISC were one sen or 0.12% higher at RM8.60, valuing the company at RM38.39 billion.