A report from energy services firm Baker Hughes on Friday showed U.S. drillers added 137 rigs in the first quarter, the most since the second quarter of 2011. That has fueled demand for machinery, resulting in business spending on equipment rising in the fourth quarter for the first time in a year. Manufacturing is also benefiting from a surge in business sentiment following President Donald Trump's pledge to pursue business-friendly policies, including cutting corporate taxes and deregulation.
KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd
(MMHE) fell into the red for the financial year ended Dec 31, 2016, posting a net loss of RM134.3mil.
The group said on Tuesday that the losses were mainly due to lower contribution from the Heavy Engineering segment, net forex losses compared to gains in the previous year, as well as the impact from recognition of higher impairment on assets in the current year.
The firm’s revenue for the year fell by half, dropping 51.5% to RM1.19bil.
The heavy engineering segment registered lower revenue by 63% against the previous year as a result of fewer and lower backlog and order intake.
In its filing to the stock exchange, the firm said an operating loss of RM107.7mil was recorded as compared to RM9.2mil profit a year ago, mainly due to insufficient revenue and contribution to absorb the Group’s overhead.
For the fourth quarter, MMHE recorded a net loss of RM119.7mil compared to a net loss of RM27.1mil during the same period a year ago.
Operating profit fell to RM18.7mil against RM50.4mil from a year ago, while revenue for the quarter fell 57.9% to RM303.6mil.
Revenue from the heavy engineering segment for the quarter fell by 72% at the back of fewer and lower backlog and order intake, which in turn resulted in an operating loss of RM34.4mil.
The Marine segment’s revenue and operating profit, however, was higher from a year ago, mainly due to higher value of vessels repaired from LNG and FPSO conversion works in current quarter.
The firm recorded losses per share of 7.5 sen for the quarter and 8.4 sen for the full year.
On its prospects, MMHE said although an agreement was reached by OPEC and non-OPEC members to reduce output from January 1, 2017, the commitment to honour this pact remains to be seen.
“NOCs and IOCs are expected to adopt the same strategy on deferment and scale-down of upstream projects for the major part of the year.
“Coupled with geopolitical risk, any meaningful recovery in the demand for offshore structures is not anticipated to materialise until 2018 at least,” its managing director and CEO, Cik Wan Mashitah Wan Abdullah Sani said in a statement.
MMHE said it would continue with efforts on cost management and resource optimisation to reduce its operating cost in line with the outlook of the industry.
