Boustead confident of rebuilding orderbook
KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) is confident of replenishing its orderbook and sustaining its business operation amid a challenging environment, according to executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor.
“Our current orderbook is Rm860mil and that will last us until 2015. We’re not in the habit of telling what we are working on but we’ll rebuild our orderbook,” he said after the company’s AGM.
Executive director David W. Berry said 80% of its current orderbook were for jobs related to maintenance, repair and overhaul (MRO).
“MRO (contracts) is good for us because MRO is a sustainable business and also gives us fair margin,” Ahmad Ramli said, adding that the industry would remain tough this year with some companies filing for Chapter 11 in the United States.
The past few years had been very challenging for the maritime industry, Ahmad Ramli said, adding that BHIC was not dependent on one sector alone or any single client.
Berry said BHIC would do what it could to minimise losses on its ships. He said it was better for the company’s ships to lose some money rather than lie idle, which could incur damage.
Its tanker, MT Chulan 1, is currently on a US$6,000 per day chartering contract with Asahi Tanker Co Ltd for a year. MT Chulan 2 is expected to commence chartering in the near future.
Berry said Chulan 2 was on spot charges and that the chartering rates for Chulan 1 was sufficient to cover its costs.
Its 20.77%-owned Boustead Naval Shipyard Sdn Bhd (BNS) had recently obtained financing facilities of up to Rm2.06bil, which is a part of an overall syndicated facilities amounting to Rm5.56bil.
The remaining syndicated facilities, for up to Rm3.505bil, are still being negotiated.
The funding facilities are for the construction of six second-generation patrol vessels with combat capabilities for the Royal Malaysian Navy, following the contract awarded to BNS by the Defence Ministry. Last December, BNS was awarded a Rm9bil contract from the ministry to design, build and deliver six second-generation patrol vessels or littoral combat ships (LCS).
Ahmad Ramli explained that BHIC was not overcharging the Government for the six LCS. “While people think we’re overcharging, it’s not more than market price. The price is very competitive. We’re not overcharging anybody,” he said.
Asked if the country needed LCS, he said as the country’s defence and diplomatic defence were well structured, the ships would be an insurance.
“Any country will have to buy insurance. Our insurance is very fair,” he said.
Ahmad Ramli said the Rm9bil contract would create economic spin-offs and provide employment. The delivery of the ships is expected in 2017, with follow-on ships every six months thereafter.