RM22.7m Q3 net loss for MMHE

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) fell into the red registering a net loss of RM22.72 million for the third quarter ended Sept 30, 2018 against a net profit of RM16.41 million in the previous corresponding period, as the marine segment swung to losses.

Its revenue, however, rose 34.6% to RM289.8 million from RM215.35 million.

The heavy engineering segment recorded an operating loss of RM4.1 million against RM1.8 million loss in the corresponding quarter, mainly due to additional cost provisions made for ongoing projects in the current quarter.

Meanwhile, the marine segment saw an operating loss of RM16 million against RM17 million profit in the corresponding quarter, mainly dragged by additional costs incurred on conversion works, where revenue recognition is still pending verification and approval with clients, and compressed margins for dry docking activities in the current quarter.

For the first nine months of the year, MMHE’s net loss widened to RM97.47 million from RM13.9 million. Revenue came in at RM701.12 million, 1% lower than the RM708.46 million in the same period last year.

Going forward, the group expects to see improvement in the offshore spending by oil majors with oil prices hovering between US$70 to US$80 per barrel.

While this augurs well for order book replenishment, it is not expecting significant contribution from the heavy engineering segment for the remaining of this year.

In view of the impending compliance to the International Maritime Organisation fuel sulphur cap ruling by January 2020, MMHE foresees a pickup in marine repair activities in the coming year.

“While the group is optimistic of maintaining current level of marine repair activities for the final quarter of this year, the marine segment performance has been affected by deferment of dry dockings by clients in the first half of this year as well as protracted claim discussions with marine conversion clients.”

As the industry outlook continues to be challenging in the current financial year, the group will focus on replenishing its order book in various geographical areas.