MMHE eyes RM4bil contracts

New job: MMHE’s West Yard in Pasir Gudang, Johor. The company recently won a RM1bil contract for an offshore project in Sarawak.

KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) is targeting to secure some RM4bil in new contracts this year, even as some of the jobs that it had eyed earlier were deferred due to the low price of crude oil.

The fabricator is looking to turn around its fortunes after making a loss last year. The company had recently won a RM1bil contract for an offshore project in Sarawak.

The group’s managing director and chief executive officer Wan Mashitah Wan Abdullah Sani said that its tender book currently stood at RM2.7bil. Beyond this, it is also preparing to submit bids for another RM1.7bil worth of jobs, she said.

The group’s order book currently stands at RM1.01bil made up of the Bokor Phase 3 development project in offshore Sarawak, which involves the engineering, procurement, construction, installation and commissioning of the project’s central processing platform (CPP).

“The current order book, as well as the Bokor project, provides us some earnings visibility over at least the next three years. In the meantime, we are still pursuing projects to increase our backlog in the heavy engineering business,” she told reporters after MMHE’s AGM.

“There are major projects on offer that we have bid for, but some were deferred due to the current uncertainty in the oil and gas (O&G) industry. Our main focus now is to diversify our revenue sources, which we have been doing for the past several years, as well as cost cutting and improving efficiency,” she said.

The group is primarily involved in the heavy engineering and marine solutions business. According to Wan Mashitah, the marine business generates a steady turnover of RM200mil a year for MMHE.

On whether there is a requirement for O&G contractors operating in Sarawak to partner with local parties in the state, MMHE said it was unaware of this.

The issue stems from Sarawak’s work permit moratorium last year on employees of Petroliam Nasional Bhd (Petronas) from outside the state. The issue was resolved after Petronas agreed to increase the number of local employees in management roles to at least 60% by 2020.

“As far as we know, there was no indication whatsoever on this. It is very much the contract owners’ prerogative. The Bokor project comprises several structures and what we got was the CPP portion. There are other packages which will be given to others,” said MMHE chairman Datuk Nasarudin Md Idris.

The group fell into the red during its latest financial year ended Dec 31, 2016 (FY16) with a RM134.3mil net loss compared to a RM43.89mil net profit in FY15.

Aside from having to make impairments amounting to RM140mil during the year, the group’s revenue base also fell considerably on a year-on-year basis. Its revenue fell to RM1.19bil for FY16 from RM2.46bil the year before.