Friday, November 25, 2011

S&P: MISC's planned exit from liner biz no impact on rating

KUALA LUMPUR (Nov 25):'' Standard & Poor's Ratings Services' rating on MISC BHD [] (BBB+/Negative/--) is not affected by the shipping company's planned exit from the liner business by June 2012.

The ratings agency said on Friday while the proposed transaction will likely result in losses for MISC, most of the losses will be non-cash in nature.

'Nevertheless, we believe the business relationship between MISC and its parent has strengthened over this period, supporting the rating. Petroliam Nasional Bhd. (foreign currency A-/Stable/--; local currency A/Stable/--; axAA+/--) owns a 62.7% stake in the company,' it said.

MISC, had on Thursday, said it had decided to exit from the liner (container shipping) business operations due to the current challenging conditions and high operating cost environment. Its liner business suffered a total financial loss of US$789 million over the past three financial years which had impacted the overall financial performance of MISC.

MISC had also then said it expected to incur losses in current financial year ending Dec 31, 2011 after it decided to exit its liner business operations, as the expected one-off costs to the income statement are estimated to be approximately US$400 million..

For the second quarter ended Sept 30, 2011, MISC's'' 2Q net profit fell 61.8% to RM140.96 million from RM369.36 million a year earlier, due mainly to depressed aframax freight rates in petroleum business, lower liftings in Liner business and high bunker costs. Its revenue for the quarter fell 15.1% to RM2.62 billion from RM3.08 billion.

For the six months ended Sept 30, MISC's net profit slumped to RM262.04 million from RM797.34 million, on the back of a decline in revenue to RM5.63 billion from RM6.36 billion in 2010.

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