MHB posts RM104.35m net loss for 1Q as marine, engineering segments dragged

TheEdge Wed, Apr 28, 2021 01:55pm - 2 years View Original


KUALA LUMPUR (April 28): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) posted a net loss of RM104.35 million for the first quarter ended March 31, 2021 (1QFY21) versus RM6.13 million net profit a year ago, dragged by operating losses recorded by both its marine and heavy engineering segments.

In a bourse filing today, MHB said revenue for the quarter dipped to RM343.57 million from RM346.44 million previously, mainly due to lower revenue in the marine segment, partially offset by the higher revenue from the heavy engineering segment.

Consequently, MHB posted a net loss per share of 6.5 sen versus earnings per share of 0.4 sen previously.

The company did not declare any dividend for the quarter.

Reviewing its performance, MHB said the heavy engineering segment recorded an operating loss of RM85.1 million in the current quarter, from an operating profit of RM1.2 million a year earlier, mainly due to additional cost provision recognised as a result of revised completion target date for an ongoing project during the current quarter.

It said the revised date was necessary in view of delayed offshore commissioning works.

"The group is currently undertaking all necessary actions to mitigate any further schedule slippage and will rigorously pursue actions to recover costs associated with these rectification activities against all relevant parties including subcontractors and vendors," it said.

On its marine segment, MHB said the segment posted lower revenue of RM39.4 million compared with RM119.7 million a year earlier as a result of lower number of vessels secured for repair and maintenance works.

It said this was due to the limited volume of marine repair projects in the current market as a result of high charter rates offered for shipments during the prolonged winter period.

The lower number of vessels secured was also attributable to the lingering effects of the Covid-19 pandemic.

The segment recorded an operating loss of RM17.7 million compared with RM1.5 million loss in the corresponding quarter in tandem with the decrease in revenue.

On its prospects, MHB said border restrictions are expected to prevail and to continue impacting the marine repair industry.

It said the prospects of acquiring more marine repair projects is highly dependent on the reopening of borders and worldwide recovery from the Covid-19 pandemic.

Furthermore, it said competition is expected to be stiffer with competitors such as Singapore leveraging on its in-country infrastructure and technical experts to capture limited opportunities in the market.

Hence, the group expects the marine business to continue to remain challenging.

MHB said it will continue to pursue business opportunities in other segments and new regions to grow its order book.

"Focus on execution and safe delivery of ongoing projects along with implementation of key initiatives to manage and optimise operating costs remain key priorities for the group as it aims to emerge from the crisis stronger and more resilient amidst the challenging environment," it said.

In a separate statement, MHB managing director and chief executive officer Pandai Othman said aligned with the recent recovery in oil price, several deferred projects have since been revived.

"We have seen positive results in our efforts to replenish our order book with the recent award of EPCIC contract for SK408W Jerun Development Project, offshore Sarawak.

"Nevertheless, the volatile industry condition and the wider lingering effects of the COVID-19 pandemic remain major risks moving forward.

"As such, despite the oil market continuing to show signs of recovery from last year's crisis, we maintain our cautiously optimistic stance regarding our business prospects throughout the year and into 2022," he said.

At the midday break today, MHB rose 1.8% or one sen to 56.5 sen, valuing it at RM904 million.

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