MMHE's Dry Dock at its yard in Pasir Gudang Johor
KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd
(MMHE) saw its earnings swing to the red with a net loss of RM7.58mil in the first quarter ended March 31, 2016, from net profit of RM36.03mil recorded a year ago.
In its filing with Bursa Malaysia on Wednesday, the company attributed its performances to the significantly lower revenue and operating loss from the offshore segment, due mainly to lower backlog from most projects nearing completion.
Revenue during the quarter fell to RM256.72mil against RM719.5mil in the previous corresponding period in 2015.
During the quarter, MMHE completed the Kanowit hook-up & commissioning, and repair and maintenance works of 16 various vessels.
The offshore business unit recorded revenue of RM136.4mil against RM616.3mil a year ago, due to lower backlog as most projects are nearing completion and lesser change orders recognised in the current period.
MMHE said the Malikai Tension Leg Platform project is close to completion which is expected by 3Q16. The offshore unit continues with existing fabrication works. Also, works have commenced on the four sub-contract packages under the RAPID Pengerang projects and will soon start on the F12 Kumang WHP project.
During the quarter, the offshore business secured a small piping prefabrication work for RAPID Package-3 project.
Meanwhile, the marine business unit registered a higher revenue of RM120.3mil compared to RM103.2mil last year due to higher work value for LNG, LPG, FPSO and FSU category vessels repaired.
“Given the challenging environment in the upstream segment, the group’s offshore business is expected to remain sluggish. MMHE has, however, over the years taken several initiatives to diversify into other business areas which include piping, mechanical and structural service works for the refinery and petrochemical segment, hook-up & commissioning as well as facilities improvement and maintenance projects,” said MD and CEO Datuk Haji Abu Fitri Abdul Jalil in a statement.
He expects the marine business to remain positive and to some extent cushion the slowdown in the offshore business. The group is looking at several initiatives to expand the marine repair business to balance its revenue mix.
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