MISC to exit container shipping business

KUALA LUMPUR (Nov 24): MISC BHD [] has decided to exit from the liner (container shipping) business operations due to the current challenging conditions and high operating cost environment.

The company said on Thursday that 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 said the drastic shifts in the industry landscape were challenging the validity of today’s operating models.

Besides contending to survive in the present depressed freight environment which has seen most operators suffering financially, operators are now forced to re-evaluate their respective business strategies and goals, it said.

MISC president and chief executive officer Datuk Nasarudin Md Idris said the company comprises eight distinct businesses, adding that investment prioritisation and opportunity cost consideration were necessary as the company allocated its resources.

“Given MISC’s increasing focus on maritime and transportation solutions for the energy sector, the opportunity cost of MISC remaining in the liner business with the expected larger demand of investment resources to stay relevant, has unfortunately reached an untenable position for the company.

“The company’s decision to exit from the liner business is also hastened by the present difficult operating conditions in which the liner business suffered a total financial loss of US$789 million over the past three financial years that had impacted the overall financial performance of MISC,” he said.

MISC said the exit process would involve the withdrawal from various trade alliances and termination of related service and operational contracts.

The process will also entail the disposal of liner related assets, it said.

MISC said liner business was expected to cease its operations by 30 June 2012.

“Subject to market conditions during the exit process and the company’s successful execution of its exit plans, the estimated one-off costs to the income statement are expected to be approximately US$400 million for the financial year ending Dec 31, 2011.

“The cash cost of the exit is expected to be approximately US$30 million for the same financial year,” it said.