MMHE’s Q3 earnings dive on offshore segment loss

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) net profit plunged 56.6% to RM16.97 million for the third quarter ended Sept 30, 2015 from RM39.09 million in the previous corresponding period, dragged down by an operating loss in the offshore segment.

Revenue went down 19.18% from RM539.79 million to RM436.25 million.

In a filing with the stock exchange, MMHE said the offshore business registered an operating loss due to the completion of most projects and additional cost provisions being made for the Malikai TLP project, whereby the compensations and claims are currently being actively pursued.

The group’s marine segment, however, saw a higher operating profit on the back of higher value for vessels repaired.

MMHE said the downturn in the upstream oil and gas industry is expected to be protracted and this adverse market scenario will have an impact on the offshore business unit.

“Significant offshore projects deferments will result in under utilisation of assets, which may be subjected to impairment tests,” it added.

The company said it continues to implement the new business initiatives put in place much earlier in anticipation of the current cycle to reduce the impact going forward.

The marine segment is anticipated to remain strong and to a limited extent will cushion the negative impact from the major downturn in the offshore business.

Nine-month net profit, meanwhile, came in 37.4% lower at RM71.02 million versus RM113.45 million on the back of a 20.72% decline in revenue from RM2.19 billion to RM1.74 billion.