MISC RAISES CONCERNS ABOUT RESULTS THIS YEAR \ WEAK EXCHANGE RATE LIFTED PROFIT IN '97

MISC RAISES CONCERNS ABOUT RESULTS THIS YEAR \ WEAK EXCHANGE RATE LIFTED PROFIT IN '97

Malaysia International Shipping Corp. Bhd., spurred by a weaker exchange rate, posted a 15 percent increase in profit for 1997, but executives are concerned about this year.

Earnings for the year increased to 582.52 million Malaysian dollars (US$161 million) from M$506.55 million the previous year, on revenue of M$2.79 billion, also up 15 percent.''The weakening of the ringgit against the U.S. dollar helped the group achieve improved results as the bulk of the group's revenue is denominated in U.S. dollars,'' a company spokesman said.

As with many shipping lines, MISC generally reports income in U.S. dollars and its spending in the local currency, also called the ringgit.

Meanwhile, continued regional economic turmoil is dampening overall trade, the spokesman said. And sharper competition and overcapacity is putting pressure on freight rates at MISC and all other carriers.

''While no effort will be spared to compete for business, the prospects for the group as a whole in 1998 will likely be less favorable than 1997,'' the board said in a statement to the stock exchange.

As reported, MISC, the country's largest shipping line, will become a subsidiary of state oil firm Petronas in what management says is a move to hone its competitive edge. MISC is controlled by the government pension fund and 24 percent owned by Petronas, which will increase its holding to more than 51 percent by buying some of the government stake.

MISC's liner business has been struggling in the face of partnerships formed among other carriers and low freight rates.

Nearly all Malaysian trade is seaborne, but just 15 percent of container business moves in Malaysian-flag vessels, government figures show. The government is hoping to nearly double capacity by the end of the decade, to 900 ships of 7 million deadweight tons.

Malaysia is offering a range of incentives to improve the industry, including a Shipping Fund and tax exemptions on income derived from shipping operations by local companies.

As part of the restructuring, MISC will acquire Petronas Tankers Sdn. Bhd. by issuing new shares.

Also in the package is the purchase of Hong-Kong based Pacific Basin Bulk Shipping Ltd. from a transport group called Konsortium Perkapalan Bhd.; and controlling stakes in Asia LNG Transport Sdn. Bhd. and Asia LNG Transport Dua Sdn. Bhd. The last gives MISC nine existing ships and two due for delivery next year.

''With the acquisitions, the corporation will be transformed into the country's leading shipping line to enable it to take advantage of economies of scale with consequent lower operating and overhead costs,'' the spokesman said.

MISC last month inaugurated a new weekly container service to Singapore; Ho Chi Minh City; and Osaka, Nagoya and Yokohama, Japan.

The line is promising transit times of four days between Port Kelang, the main Malaysian gateway, and Ho Chi Minh City and five days between Ho Chi Minh City and Osaka. Southbound from Yokohama to Kelang will be nine days.