Malaysia International Shipping Corp, the world's largest carrier of liquefied natural gas, reported lower quarterly profit after selling fewer ships and said 2005 shipping rates were likely to be weaker.
Malaysia's fourth-biggest listed firm, valued at $9 billion, said on Thursday net profit fell 7.3 percent to 853.05 million ringgit ($227 million) in its fiscal first quarter to the end of June from 920.19 million for the same period a year earlier.
Operating profit rose 7.1 percent to 710 million ringgit, helped by a contribution from newly delivered LNG and petroleum tankers and a turnaround at its ship-engineering unit. Compared with the previous quarter, however, operating profit was down 15.8 percent due to weaker tanker rates.
Analysts expect full-year profits to decline sharply as the global fleet expands, putting further pressure on shipping rates.
"The first-quarter results were within expectations; there were no surprises. Profits will be softer this year because of lower rates," said Nigel Foo, an analyst with AmSecurities.
MISC's 19 tankers account for a 10th of total world LNG capacity. It plans to add 10 tankers to its fleet by end-2008, boosting capacity by 80 percent to 3.6 million cubic metres.
MISC, which also has a fleet of 52 crude oil tankers, has four more very large crude carriers (VLCCs) on order to add to its current fleet of seven. The average petroleum tanker rate has fallen nearly 70 percent from record levels in November because of seasonal factors and as the size of the global fleet has increased.
"Going forward, we do not believe that we are going to reach last year's high, although the market will still be strong," MISC Chief Executive Shamsul Azhar Abbas told reporters on Thursday.
MISC, 62-percent-owned by state oil and gas firm Petronas, booked a gain of 244.2 million ringgit from the sale of four bulk vessels in the first quarter compared with a gain of 320 million ringgit from the disposal of 17 ships a year ago.
MISC has sold nearly all of its bulk vessels to focus on the more lucrative energy business and to take advantage of the high prices they fetched because of an earlier shortage of ships.
For the year to March 2006, net profit is forecast to fall 41 percent to 2.79 billion ringgit from a fiscal 2005 profit of 4.76 billion, which included a 1.8 billion ringgit gain from ship sales, according to Reuters Estimates.
Shares of MISC rose 12 percent in the April-June quarter, outpacing a 2 percent gain in the main Composite Index. The stock, which hit a record high of 19 ringgit last month, closed down 1.1 percent at 18.30 ringgit on Thursday ahead of the results.
MISC shares trade at just over 12 times forecast earnings, compared with 15 times for Belgium's Exmar and 16 times for Norway's Golar LNG, its two main LNG-carrier rivals in the region.
Among other Asian shippers, Japan's Mitsui OSK Lines trades at a multiple of around 8 and Kawasaki Kisen at 6, though both are chiefly in container shipping.
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