MISC Berhad today announced its first quarter results ended 31 March 2012.

For the first quarter ended 31 March 2012, the Group recorded revenue of RM2,403.9 million, a 17.8% decrease as compared to RM2,924.4 million in the same calendar period of last year ("comparative quarter").

The revenue decrease was largely due to reduction in Liner business revenue from lower volume carried and lower freight rates. The business segment suffered a 93.0% reduction in liftings following the Group's decision to completely exit from the Liner business operations by middle 2012. Lower revenue in Heavy Engineering business segment further contributed to the decrease in Group revenue.

Lower earning days from reduced demand combined with softer rates have translated to 3.5% revenue decrease in Petroleum business.

On the back of lower revenue, the Group's operating profit of RM12.2 million for the quarter was 93.2% lower than the comparative quarter's operating profit of RM180.2 million. The decrease in the Group's operating profit was largely due to higher losses in Liner business and lower profit in Heavy Engineering business.

Despite 8.4% revenue growth in Chemical business, increased operating costs particularly bunker, has resulted in higher losses for the segment.

The Group suffered loss before tax of RM373.9 million for the quarter, a 67.9% increase as compared to RM222.7 million loss before tax in the comparative quarter, mainly due to lower operating profit generated in the current quarter. The Group recognised additional impairment provision on its ships of RM116.4 million in the current quarter following decrease in asset values from deterioration of shipping markets. In comparison, the Group recognised impairment provisions of RM456.6 million in the comparative quarter. The Group also recognised RM220.5 million additional Liner exit provisions in the current quarter.

Compounded by continuing uncertainties in global economic growth, the prospects for shipping industry continue to remain challenging. Low freight rates, rising bunker costs and vessels supply overhang contribute to the challenges faced and do not bode well for the rest of the year. Cost management will be an important priority in the few quarters ahead.

Meanwhile, LNG market remains favorable with buoyant demand for gas energy in Japan, whilst the prospects for offshore and Heavy Engineering businesses remain favorable in the short and medium term and continue to provide stability to the Group.