MMHE’s widening losses in FY16 due to offshore segment
KUCHING: Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) financial year 2016 (FY16) results have come in below analysts’ expectations, on the back of widening losses recorded by the group.
MMHE revealed in a filing on Bursa Malaysia that the group registered a loss before tax of RM135 million for the current year ended December 31, 2016, against profit before tax of RM22.5 million in the corresponding year.
The group said that this was mainly due to lower contribution from Heavy Engineering, net forex loss compared to gain in previous year as well as the impact from recognition of higher impairment on assets in current year.
According to the research arm of TA Securities Holdings Bhd (TA Research), MMHE’s FY16 core net loss of RM1 million, was below its expectations and consensus.
Similar to consensus, TA Research had forecasted core profit of RM50 million.
“The disappointment was mainly due to steep losses at the offshore segment,” it said. “Furthermore, we had anticipated recognition of Investment Tax Allowances (ITA) for yard expansion expenditure, which did not come true.”
TA Research noted that a one-off write back of a chunky change order for a marine project in the fourth quarter of 2016 (4Q16) failed to uplift profits.
“In addition, successful cost optimisation measures that resulted in significant drop in labour and material costs also failed to stop the bleeding.
“FY16 headline net loss of RM134 million includes asset impairments of RM140 million recognized in 4Q16, coupled with net FX gain of RM8 million.
“This was MMHE’s maiden net loss since listing in 2011,” the research arm said.