Malaysia's leading shipping firm MISC Berhad has announced a second quarter (Q2) drop in profits due to losses from its liner business and higher operating costs.

The Malaysia-listed firm posted a profit before tax of $137.4 million (497.9 million ringgits) in the quarter ended September 30, 22% down on the $175.8 million recorded in the same quarter in 2007.

MISC blamed the decline in profit primarily on its container line business, which lost $66.7 million (242.2 million ringgits) in the first six month of the year, as well as higher operating costs.

Q2 revenue, however, was 40.3% higher at $1.2 billion (4.46 billion ringgits), compared to $874.3 million (3.18 billion ringgits) recorded in the corresponding quarter a year ago.

''The container shipping segment is expected to weaken further resulting from the global economic slow down and excess shipping capacity. Whilst easing the bunker price provides some element of relief for operating costs, other costs remain high, compressing profit margin,'' said MISC.

Looking ahead, the company is expecting lower profits for the current financial year.

''The global petroleum shipping space is experiencing short term freight firmness that is expected to come off with weakening demand and increasing tanker supply,'' it said.

MISC owns and operates 27 LNG carriers and two more scheduled for delivery by end-2009.