A recovery, MMHE said, is expected to happen next year, at the earliest.
KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd
's (MMHE) net loss widened in the first quarter ended March 31, 2019, over the previous corresponding quarter as expected contract orders had yet to materialise.
"Despite the oil price stability, project sanctions and materialisation of work orders are slower than expected especially in the offshore fabrication segment, affecting the replenishment of orderbook," the group said in a stock exchange filing.
According to the group, 1QFY19 net loss grew 16.2% to RM29.37mil from RM25.27mil in the comparative quarter although revenue rose to RM203.11mil, 7.9% over RM188.26mil in the same quarter last year.
The bulk of the revenue was contributed by the heavy engineering segment, which rose 13% to RM125.4mil due to the higher progress of ongoing projects in the current quarter.
However, operating loss in the segment nearly doubled to RM23.9mil from RM12.8mil over a year earlier due to higher unabsorbed overheads as expected contract awards had yet to materialise.
In the marine segment, revenue was marginally higher at RM77.7mil while operating loss similarly rose slightly to RM7.5mil.
MMHE said its marine segment is making a recovery as it expects more dry docking activities at its yard owing to the growth in global sea trade.
"During the period under review, the Group has received more orders for LNG repairs compared to last year and is positive of maintaining current level of marine repair activities for this year," it said.
With regard to its business diversification efforts, the group was recently awarded a long-term plant turnaround and maintenance services contract by Petronas.
"This is aligned with the Group's strategy to venture into services that provides recurring orders in support of business sustainability," it said.
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