The move will result in a one-off $400 million charge this year and a full-year loss, Kuala Lumpur-based MISC, controlled by Malaysia’s state oil company Petroliam Nasional Bhd., said in a statement today. Operations will halt by the end of June.
“It’s a good thing for them in the mid-to-long term,” said Firdaus Hisham, a Macquarie Securities Ltd. analyst in Kuala Lumpur. “The margins were never that attractive.”
MISC also said second-quarter net income fell 62 percent from a year earlier to 140.9 million ringgit ($44 million) as losses from carrying containers offset profits at units operating liquefied natural gas tankers and building offshore facilities. Mitsui O.S.K. Lines Ltd. and Nippon Yusen K.K. have also announced container-shipping capacity cuts this year as tumbling rates cause industrywide losses.
“In view of the expected larger demand of investment in the liner industry, the cost for us to remain relevant in the liner business is untenable,” MISC Chief Executive Officer Nasarudin Md Idris said in an e-mailed statement today.
The shipping line reorganized its container business in January 2010 by exiting Asia-Europe routes to focus on intra- Asia services.
MISC halted its stock in Kuala Lumpur ahead of the announcement. The shares have fallen 27 percent this year, worse than a 5 percent drop in the benchmark FTSE Bursa Malaysia KLCI Index.
The company’s sales dropped to 2.6 billion ringgit in the three months ended Sept. 30 from 3.1 billion ringgit a year earlier, it said. Its container unit had a 313 million ringgit operating loss compared with a 454.5 million ringgit operating profit in energy-shipping over the past two quarters.