BHIC aims to return to the black
Group counts on oil and gas as well as vessel maintenance and repair ops
Boustead Heavy Industries Corp Bhd (BHIC) is confident the group will return to the black this year, says managing director Tan Sri Ahmad Ramli Mohd Nor.
PETALING JAYA: Boustead Heavy Industries Corp Bhd (BHIC) is confident it will return to the black this year on growth driven by the oil and gas (O&G) industry and improved maintenance, repair and overhaul (MRO) services.
Aside from these two growth paths, managing director Tan Sri Ahmad Ramli Mohd Nor said BHIC stood to gain from services and expertise it would offer in the building of six littoral combat ships (LCS) by associate Boustead Naval Shipyard Sdn Bhd (BNS).
The RM9bil contract from the Defence Ministry to BNS should also support BHIC’s financials for the next five to six years.
Last year, BHIC’s earnings were largely impacted by cost escalations in its commercial shipbuilding projects. It said the costs would not be reflected in the 2013 financial year, as they had been provided for.
Going forward, the maritime, defence and heavy engineering group was looking at businesses with attractive margins.
Ahmad Ramli also said the main focus in the medium to long term was to deliver the LCS under a Government contract, of which he was confident.
“Certainly, I believe the LCS and MRO services would bring the group back to profitability,” he said after the group’s 41st AGM.
“(Last year,) the commercial shipbuilding business suffered globally, but we’re working in more niche areas now with less risk and more demand, as well as being a service provider in O&G.”
Group managing director Tan Sri Lodin Wok Kamaruddin said the group had also switched focus to building smaller commercial ships as the business had better margins.
For its MRO services, 20% of its business came from commercial ships while the majority was from the Navy and coast guard ships.
“We believe our three shipyards in Langkawi, Penang and Lumut would be able to service them well and we want to focus on smaller ships for which we have better expertise and capabilities,” he said.
BHIC, appointed the official sole MRO centre for military helicopters manufactured by the Eurocopter Group, was also collaborating with Eurocopter Malaysia Sdn Bhd to build the centre in Subang Skypark. The MRO centre is estimated to cost between RM12mil and RM15mil and will be operational in 2014.
Lodin said its services for the O&G industry would be new to the group. He hoped the group could contribute to the sector, such as in terms of providing software and systems for marginal oilfield operations.
“In addition, we have the facilities to build floating, production, storage and offloading (FPSO) and various barges to further support the industry,” he said, adding that the company was already building offshore vessels for Petroliam Nasional Bhd (Petronas) and some major O&G companies.
The group was also providing aer- onautical services to the O&G industry through its 51%-owned unit Atlas Hall Sdn Bhd. BHIC is a licensed O&G fabricator under Petronas.
The group has in total RM 230 mil worth of contracts with the Defence Ministry now, RM 47.4 mil successfully formalised and a previous deal worth RM182mil for Bofors guns used in the LCS.
In 2012, BHIC recorded an RM 131.6 mil net loss compared with an RM 12.8 mil net profit a year ago.
Meanwhile, Lodin said there was no development in Affin Holdings Bhd’s bid to acquire Hwang-DBS (M) Bhd and that “we will inform the market at the right time”.
Lodin is also the deputy chairman of Affin Holdings.