MISC has reported a 25% fall in fourth quarter net profit despite a larger LNG carrier fleet and a spike in tanker rates during the quarter.

The state-backed energy shipper was hurt by a combination of higher asset impairments and higher finance costs compared to a year ago.

Net profit came in at MYR 247.4m ($59.6m) versus the MYR 326.9m achieved in the corresponding period at the end of 2018.

MISC’s LNG carrier arm saw operating profit jump 44.6% to MYR 269.3m, while revenue increases year-on-year by 15.3% to MYR 648.4m.

It attributed this to the higher number of operating vessels in the current quarter following acquisition of two LNG carriers, one each in December 2018 and January 2019, and the redeployment of vessels previously on charter suspension.

The performance at its tanker arm was more mixed with revenue lower by 9.4% to MYR 1.15bn, while operating profit rose by 57% to MYR 171.4m

MISC said the revenue was lower due to a lower number of vessels operating during the quarter, while operating profit improved on the back of the rate spike seen at the end of the year.

“Petroleum freight rates were elevated and volatile throughout the fourth quarter of 2019 on strong seasonal demand and geopolitical factors,” MISC said.

“We were able to reap some of the benefits of the robust albeit volatile market and ended the year on a stronger note.

“The tanker market is widely expected to remain firm in 2020 due to fewer deliveries and growing long-haul prospects as well as demand growth arising from IMO 2020.

“However, the recent Covid-19 virus outbreak has posed some risks to the oil and tanker market, and whilst the impact is currently uncertain, the tanker market could face short-term headwinds if the outbreak is not contained or if the situation escalates.”

In the LNG shipping segment, MISC said spot rates ended the year lower compared to the previous year mainly due to lack of demand owing to mild winter and high inventories.

However, it said liquefaction expansion in North America and the Middle East is expected to lead to an increased requirement for vessels and this should support charter rates.