For 4Q13 ended Dec 2013 today, the Petronas subsidiary posted RM1.08 billion in net profits from RM2.14 billion of quarterly revenue. an improvement over RM721.11 million in net profits from RM2.3 billion revenue in 4Q12.
Overall, MISC’s net profits for FY13 stood at RM2.08 billion from RM8.97 billion in revenue, up 170% year-on-year (yoy) from RM770.24 million in net profits from RM9.05 billion revenue recorded in FY12.
“The increase in profit was mainly due to higher share of profit from joint ventures, especially GKL, from recognition of a once off gain on disposal of Gumusut Kakap FPS through finance lease in the current year,” said the company in a regulatory filing.
According to MISC’s accounts, gains from share of profit on joint ventures amounted to RM1.16 billion for FY13.
GKL refers to Gumusut-Kakap Semi-Floating Production System (L) Limited, which owns the Gumusut-Kakap Semi-Floating Production System (GKSFPS). In turn GKL had purchased GKSFPS from MISC on Oct 4, 2012 for US$2.03 billion (roughly RM6.77 billion) — MISC is owed US$1.42 billion (about RM4.7 billion) while the remainder was satisfied through issuance of 611.4 million new shares in GKL worth USD$1 each.
MISC had then divested 50% equity in GKL to E&P Venture Solutions Co Sdn Bhd a wholly owned subsidiary of Petronas Carigali Sdn Bhd, a deal valued at USD$305.7 million (approximately RM1.01 billion).
“Total proceeds from the exercise would total US$1,732.3 million of which a large part will be used to pare down our debts. Besides savings on interest, it will also create the debt headroom for us to gear up for future growth,” said MISC president and chief executive officer Nasarudin Md Idris in 2012 on the exercise.
Petronas Carigali is a 20% partner in the Gumusut-Kakap project located 120km off the shore of Sabah, which involves the joint development of two ultra-deepwater discoveries with about 300-500 million oil barrels in reserves. Other partners are ConocoPhillips Sabah and Murphy Oil with 33% and 14% interest respectively.
At 3pm, MISC was traded at RM6.28, up 8 sen.
LNG segment drives higher operating profit
In terms of operating profit, MISC posted an improvement of 4.3% y-o-y, recording RM1.55 billion in FY13 compared to RM1.51 billion the previous year.
“(This is) mainly due to higher LNG business revenue and lower cost from smaller fleet of operating vessels in Chemical and Petroleum businesses,” said MISC today. “ The prior year’s profit includes a one-off settlement received from early redelivery of Petroleum vessels on time charter contracts.”
However MISC’s revenue for the year was dragged down by lower income from its heavy engineering segment given projects at hand are nearing completion. In addition its petroleum business also saw lower revenue from a smaller fleet of operating vessels as well as cold layup of several vessels.
The dragdown was mitigated somewhat by higher revenue in MISC’s LNG and offshore businesses, which was driven by higher charter hire rates and more earnings days of LNG vessels, said MISC.
“Full-year revenue recognition of two Floating Storage Units has (also) led to an increase in LNG business revenue,” added the company.
