BHIC rebounds into the black in 2016

Separately, BHIC said commercial shipbuilding would continue to come under pressure from the low demand for ships, tonnage overcapacity, tight financing, low oil prices and the uncertain global economic outlook.

KUALA LUMPUR: Boustead Heavy Industries Corporation Bhd (BHIC) staged a turnaround in its financial performance in the fourth quarter of 2016 and also for the financial year 2016.

BHIC announced on Friday earnings of RM76.69mil compared with net losses of RM30.74mil in FY15 while its revenue increased 15.7% to RM307.52mil from RM265.64mil.

BHIC recorded a sharp improvement in its operational profit of RM101.17mil – compared with only RM11.63mil in FY15. Its also recorded a decline in losses from its associates at RM27mil compared with RM19.31mil.

In the fourth quarter, it returned to the black with earnings of RM55.59mil in contrast with losses of RM52.26mil a year ago. Its revenue increased by 86% to RM110.47mil from RM69.21mil.

Earnings per share were 22.37 sen compared with loss per share of 21.03 sen.

Commenting on the FY16 financial performance it said the revenue from defence-related maintenance, repair and overhaul (MRO) activities contributed significantly to the group’s revenue.

BHIC also said operating costs were lower mainly due to revision in the project cost under defence-related MRO.

“Higher interest income in the current year was mainly due to deposit pledged by the group. On the other hand, finance cost was lower in the current year mainly due to repayment of borrowings,” it said.

BHIC said the joint venture companies (JV Cos) posted a slightly higher contribution in FY16 mainly from the reversal of provision for cost by Boustead DCNS Naval Corporation Sdn Bhd (BDNC) and the tax exemption granted by the Ministry of Finance (MoF) on the submarine projects.

It pointed out the associates posted a higher share of losses of RM26.9mil in the current year due to variation orders for the shipbuilding project, additional cost to completion for the restoration of KD Perantau.

There were also additional staff costs incurred under the mutual separation scheme, lack of commercial-based MRO of foreign boats and local ferries as well as no new shipbuilding projects undertaken. 

However, the chartering segment posted a loss in the current year mainly due to higher direct costs incurred by the chemical tankers under the previous spot charter arrangement prior to the disposal of the chemical tankers in May 2016 and loss on disposal of the chemical tankers. H

“Higher losses were recorded in last year’s corresponding period due to foreign exchange losses resulting from the rollover of the group’s foreign currency-denominated borrowings to purchase MT CHULAN 1 chemical tanker in prior years.