MMHE sees high demand for its marine segment

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) expects the marine business segment to recover gradually this year albeit a challenging landscape.

Managing director and chief executive officer Pandai Othman said the group had maintained a cautiously optimistic outlook on the heavy engineering segment due to labour shortage, prolonged global supply chain disruptions, and volatile commodity prices.

“The reopening of international borders has augured well for the recovery of the marine business segment. We foresee growth in demand for dry-docking at our yard as vessel owners gear up for an increase in seaborne trade requirements.

“The continued lockdowns in China have improved our market share as shipowners opted for alternative shipyards in the region.

“Nevertheless, the prevalent nationwide labour shortage may limit our ability to take on more jobs and poses significant risks to the timely execution of dry-docking works,” he said in a filing with Bursa Malaysia yesterday.

Pandai said the high crude oil prices were likely to persist for the rest of the year with oil demand surpassing supply mainly due to sanctions on Russian exports.

“In light of the high oil prices, capital spending by oil majors is expected to continue to increase.

“However, prolonged global supply chain disruptions and volatile commodity prices such as steel amid a sharp rise in global inflation could adversely impact heavy engineering business prospects as well as the execution of ongoing projects,” he said.

The group planned to focus on replenishing its order book through business opportunities in new regions and segments.

“We continue to focus on cost optimisation while maximising value creation to ensure safe and timely execution of ongoing projects,” he said.

MMHE posted a net profit of Rm21.97mil or earnings per share (EPS) of 1.4 sen for its second quarter ended June 30, compared with a net loss of Rm34.38mil or loss per share of two sen in the same quarter last year, while revenue grew 32% year-on-year to Rm400.63mil.

The higher revenue for the quarter was due to ongoing projects at its heavy engineering division and its marine business.

The marine division made a operating profit of Rm19mil during the period compared with a loss of Rm4.9mil in the corresponding quarter while the heavy engineering division made a profit of Rm1.1mil in the period compared with a loss of Rm20.4mil in 2Q21.

This was the second consecutive quarter of profit for MMHE after five consecutive lossmaking quarters. The company has been loss making for the past four financial years.

For the six months of FY22, earnings stood at Rm24.7mil or EPS of 1.6 sen while revenue amounted to Rm818mil as compared to net loss of Rm138.7mil or loss per share of 8.7 sen on Rm646mil in revenue it posted in the corresponding period last year.

The improved half year was mainly contributed by the reversal of cost provision for post sail-away projects as well as higher contribution from the marine segment in the current quarter.

The previous period’s net profit was impacted by cost provisions associated with the Covid-19 pandemic, the company said.