Malaysian shipping company MISC reported a net loss in the first quarter of this year but the company’s liquefied natural gas business logged a 11.3 per cent rise in revenue.
MISC’s 1 .16 billion ringgit ($270 million) loss in the quarter 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.
On the other side, higher earnings from engineering, LNG and petroleum shipping pushed the company’s operating profit to 845.1 million ringgit. This is a 42.8 per cent increase year-on-year.
Revenue improved 10.4 per cent to 2.5 billion ringgit in the January-March period.
LNG revenue for the Petronas shipping unit increased to 695.9 million ringgit as compared to 625.4 million ringgit in the first quarter of last year.
MISC said the rise was mainly due to higher earning days following lower dry-docking activities in the current quarter.
Looking forward, MISC expects a slowdown in LNG demand due to a “significantly weakened” economic outlook related to the situation with the Covid-19 coronavirus pandemic.
LNG shipping rates have been dipping due to the end of the peak winter season and exacerbated by a slowdown in Asian LNG demand amid the Covid-19 outbreak.
This is expected to persist in the second quarter of 2020 as the market enters the seasonal low-demand period, MISC said.
The weak global economy coupled with low LNG prices could also cause delays in planned LNG projects, which may lead to slower fleet growth, the company said.