MHB POSTS RM22.7M NET LOSS IN Q3

Net loss widens to RM97.47m for cumulative 9-month period amid challenging environment for industry

MALAYSIA Marine and Heavy Engineering Holdings Bhd (MHB) posted a net loss of RM22.71 million in the third quarter (Q3) ended September 30 compared with a net profit of RM16.40 million previously, amid challenging environment for the industry.

However, revenue rose to RM289.8 million compared with RM215.35 million previously.

It said the heavy engineering division recorded an operating loss of RM4.1 million against RM1.8 million loss in the previous corresponding quarter, mainly due to additional cost provisions made for ongoing projects in the current quarter.

The marine division recorded RM16 million operating loss against RM17 million profit in the corresponding quarter. This was mainly due to additional costs incurred on conversion works, where revenue recognition is still pending verification and approval from clients, and compressed margins for dry docking activities in the current quarter.

For the cumulative nine-month period, net loss widened to RM97.47 million compared with RM13.9 million previously, while revenue was lower at RM701.11 million from RM708.46 million before.

The company said with oil prices hovering between US$70 and US$80 (RM291.90 and RM333.60) per barrel, the group expected to see improvement in offshore spending by oil majors.

“While this augurs well for order book replenishment, the group is not expecting significant contribution from the heavy engineering segment for the rest of the year.”

It said in view of the impending compliance with the International Maritime Organisation’s fuel sulphur cap ruling by January 2020, the group expected a pickup in marine repair activities in the coming year.

“While the group is optimistic of maintaining the current level of marine repair activities for the final quarter of this year, the marine segment performance has been affected by deferment of dry dockings by clients in the first half of this year, as well as protracted claim discussions with marine conversion clients.”

As industry outlook continues to be challenging in the current year, the group will focus on replenishing its order book in various geographical areas.