BHIC to gain from Navy plan

  • Business
  • Thursday, 12 Apr 2018

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) is looking to capitalise on the Royal Malaysian Navy’s (RMN) 30-year transformation programme and is confident of securing an additional RM1bil worth of contracts this year.

The RMN’s “15 to 5” transformation programme will see it phasing out some older ships, which are more costly to maintain, and replacing them with new ships while reducing the classes of ships from 15 to only five.

Under the programme, BHIC has already secured a contract to build four littoral mission ships (LMS) via a joint venture with a China engineering firm.

BHIC’s current order book stands at about RM6.2bil, mostly from remaining works on an earlier RM9bil contract to build six littoral combat ships (LCS) and from its LMS project.

BHIC chairman Tan Sri Lodin Wok Kamaruddin (pic) said the group is focused on securing further contracts from the RMN for the commissioning of new ships as well as for maintenance, repair and overhaul works on existing ships.

The group expects to deliver the first LMS to the RMN by 2019, and said its other major project, the LCS, was progressing on schedule.

He added that it was targeting at least a 10% margin from these RMN projects.

“We are confident that our margins would improve from these existing and future contracts with the RMN, and that we will continue to unlock value for our shareholders,” he said after the company AGM.

The group had also previously delivered six petrol vessels for the use of the RMN.

On the commercial shipbuilding business, he said the company was taking a step back as there were very few orders and margins were still unattractive due to the low oil price environment.

“We are not totally giving it up.

“We have our hands full presently and, for now, we want to make sure we service our biggest customer at the moment, the Navy, and on improving ourselves to prepare for the future when the industry sees a turnaround,” he said.

However, he said, if offered a commercial shipbuilding contract with attractive margins, the group was open to taking the job.

He believes the group can make a comeback in financial year 2018 after recording a slide in profits over the past few years as the group has been implementing various exercises to improve its efficiency.

BHIC managing director Tan Sri Ahmad Ramli Mohd Nor said the group was looking to explore business opportunities outside of Malaysia.

“The key is for us to be an excellent shipyard. We have to deliver quality, competitive costing and to the requirements of the customers.

“It is not impossible for us to market our products globally. We may try to export to Europe if the costing is right,” he said.

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