Navigating the complex currents of the global energy and maritime sectors, MISC Berhad, a prominent Malaysian shipping and maritime solutions conglomerate, recently released its First Quarter 2025 financial report. This report offers a glimpse into the company’s performance, revealing a mixed bag of results as it demonstrates resilience in some segments while facing headwinds in others. Despite a dip in overall revenue, the report highlights a notable surge in its Offshore segment’s profitability and a consistent dividend payout, inviting a closer look into the details.
Core Financial Highlights: A Mixed Voyage
MISC Berhad’s first quarter of 2025 saw a reduction in overall revenue and profit compared to the corresponding period last year. Let’s dive into the key figures:
Q1 2025
Revenue: RM2,816.1 million
Operating Profit: RM857.2 million
Profit Before Tax: RM735.4 million
Profit After Tax: RM711.6 million
Profit Attributable to Equity Holders: RM705.7 million
Basic Earnings Per Share: 15.8 sen
Q1 2024
Revenue: RM3,638.3 million
Operating Profit: RM882.0 million
Profit Before Tax: RM771.1 million
Profit After Tax: RM753.8 million
Profit Attributable to Equity Holders: RM759.9 million
Basic Earnings Per Share: 17.0 sen
Group revenue declined by 22.6% to RM2,816.1 million from RM3,638.3 million in the corresponding quarter last year. This was primarily driven by lower contributions from the Marine & Heavy Engineering and Gas Assets & Solutions segments. Operating profit also saw a modest decrease of 2.8% to RM857.2 million, a testament to the company’s efforts in cost optimisation and a significant one-time gain in the Offshore segment, which helped cushion the impact of revenue decline.
Profit before tax was RM735.4 million, a 4.9% reduction from RM771.1 million, while profit after tax stood at RM711.6 million, down 5.6% from RM753.8 million. Consequently, basic earnings per share for equity holders also saw a decline of 7.1% to 15.8 sen from 17.0 sen.
Segmental Performance: Shifting Tides
A closer look at individual business units reveals varied performances:
- Gas Assets & Solutions: Revenue fell by 17.9% to RM636.2 million, and operating profit decreased by 15.9% to RM303.8 million. This was mainly attributed to lower earning days from contract expiries, vessel disposals, and prevailing lower charter rates.
- Petroleum & Products: The segment reported a 7.9% drop in revenue to RM1,252.4 million, primarily due to the strengthening of the Malaysian Ringgit against the US Dollar. However, operationally, revenue was comparable, and the 5.1% decline in operating profit to RM370.1 million was mitigated by favourable cost optimisation.
- Offshore: Despite a 4.0% revenue dip to RM510.4 million (also due to foreign exchange impact), this segment was the standout performer. Its operating profit surged by an impressive 78.1% to RM261.1 million, driven largely by a one-time gain from the commencement of a new lease contract for a Floating Production Storage and Offloading (FPSO) unit.
- Marine & Heavy Engineering: This segment experienced the most significant revenue decline, down 54.0% to RM453.1 million. This was due to ongoing heavy engineering projects nearing completion and newer projects still in their early stages. Despite this, operating profit saw a 9.7% increase to RM15.8 million, boosted by successful close-out of post sail-away projects.
- Others, Eliminations and Adjustments: The operating loss for this segment widened by 210% to RM93.6 million, primarily due to lower interest income and higher corporate expenses.
Financial Health and Cash Flow: Steadying the Ship
MISC’s balance sheet remained largely stable, with total assets, total equity, and total liabilities showing only marginal movements since the end of the last financial year. This indicates a robust financial position despite market fluctuations.
Cash flow performance, however, presented a more dynamic picture:
| Cash Flow Category | Q1 2025 (RM million) | Q1 2024 (RM million) | Change (RM million) |
|---|---|---|---|
| Net cash generated from operating activities | 773.1 | 210.8 | Up 562.3 |
| Net cash used in investing activities | (268.3) | (431.7) | Lower by 163.4 |
| Net cash generated from/(used in) financing activities | 792.0 | (631.5) | Significant swing |
The significant increase in net cash generated from operating activities, up RM562.3 million, was primarily due to lower payments made to creditors. Investing activities saw lower cash usage, mainly from reduced capital expenditure on ships and equipment. A notable shift occurred in financing activities, which generated RM792.0 million in cash, largely from higher drawdowns of loans and borrowings, a stark contrast to the cash used in the corresponding period last year for dividend payments.
The company’s capital commitments have increased to RM9,219.9 million as at 31 March 2025 (from RM7,836.1 million at 31 December 2024), reflecting ongoing investment in its fleet and projects. Contingent liabilities also saw an increase to RM1,413.2 million (from RM1,261.2 million), mainly due to performance bonds and bank guarantees.
Future Prospects and Navigating Challenges
MISC Berhad acknowledges the challenging market environment but remains focused on strategic execution and growth:
- LNG Carrier Market: Spot rates are expected to remain subdued due to vessel oversupply and delays in new liquefaction projects. However, rates are anticipated to improve from 2026 onwards. The Gas Assets & Solutions segment is focused on strategic growth and exploring opportunities for its spot vessels.
- Petroleum and Products: The tanker market outlook is mixed. VLCC rates are expected to outperform mid-sized tankers, which face pressure from new vessel deliveries. Geopolitical tensions and regulatory requirements pose additional risks. The segment’s long-term chartered vessels and niche lightering business are expected to provide support.
- Offshore: The outlook remains positive, driven by sustained global energy demand and increased upstream investments, particularly in FPSO activities in key regions. Long-term contracts and cash flows from the new FPSO Marechal Duque de Caxias are expected to strengthen performance in 2025.
- Marine & Heavy Engineering: A cautious environment persists due to geopolitical tensions. The Heavy Engineering sub-segment aims to capitalise on new energy opportunities while maintaining its conventional presence. The Marine sub-segment is pursuing strategic partnerships and high-value repair and conversion projects.
A positive development for the Group is the extension of the 100% shipping tax exemption until Year of Assessment 2026, subject to meeting minimum substance requirements. This provides a significant tax advantage for its shipping operations.
Summary and
MISC Berhad’s First Quarter 2025 report paints a picture of a company actively managing a complex and evolving global maritime landscape. While overall revenue and profit saw a decline, the strong performance of the Offshore segment, driven by a one-time gain, and robust operating cash flow generation highlight areas of resilience and strategic success. The company’s consistent dividend payout further underscores its commitment to shareholder returns.
The outlook for various segments is varied, with challenges in LNG and parts of the petroleum tanker market, balanced by positive prospects in the Offshore segment. The extension of the shipping tax exemption is a welcome relief, providing a clear benefit for the coming years.
However, potential investors should be aware of several key risk points:
- Ongoing market volatility and oversupply in certain shipping segments (LNG, mid-sized tankers).
- The impact of fluctuating foreign exchange rates, particularly the strengthening Ringgit against the US Dollar.
- Geopolitical tensions and increasingly complex regulatory requirements that could affect shipping market stability.
- The financial implications and uncertainties surrounding several ongoing material litigations, which could impact future earnings depending on their outcomes.
- The significant increase in capital commitments, which while indicative of growth, also implies increased future expenditure.
As a reminder, this analysis is for informational purposes only and should not be construed as a recommendation to buy or sell any securities.
Your Thoughts?
MISC Berhad is clearly a company that understands how to adapt and strategically position itself in a dynamic industry. What are your thoughts on MISC Berhad’s strategy to navigate these varied market conditions? Do you think the company can maintain its positive momentum in the Offshore segment and mitigate the challenges in others?
Share your insights in the comments below! And if you found this analysis helpful, be sure to check out our other articles on Malaysian corporate earnings reports.
