MMHE records net loss of RM122.69m in FY18

A recovery, MMHE said, is expected to happen next year, at the earliest.

KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd swung into the red in the financial year ended Dec 31, 2018 due to losses in both its marine and engineering divisions but it was cautious about its outlook due to uncertainties for the oil and gas industry.

MMHE announced on Wednesday it posted net loss of RM122.69mil in FY18 compared with net profit of RM34.22mil in FY17. Its revenue was higher by 1.8% at RM974.35mil compared with RM956.41mil a year ago. 

Its heavy engineering division recorded higher revenue of RM651.50mil compared with RM581.30mil mainly due to higher revenue from on-going projects. However, the division suffered higher operating loss of RM39mil compared with RM36.70mil “mainly due to close-out of completed projects in the prior year”.

As for its marine division, the revenue declined to RM322.90mil from RM365.1mil due to lower revenue recognised from conversion works in FY18.

The segment recorded an operating loss of RM81.70mil compared with profit of RM52.80mil in FY17 due to insufficient contribution to absorb the fixed overheads in FY18. This was due to lower LNG dry docking activities and suppressed margins from other marine works.

For the fourth quarter, it posted net losses of RM25.22mil, a contrast with a net profit of RM28.13mil a year ago. Its revenue increased by 10.2% to RM273.24mil from RM247.95mil. Loss per share was 1.6 sen compared with earnings per share of three sen.

On the outlook, MMHE said there were positive signs that oil prices have begun to ease to between US$50 and US$70 a barrel. Despite the gradual improvement, a range of factors have continued to influence oil prices. However, it noted that production cuts by Opec, growth in the US shale oil production and growing geopolitical tensions.

“The group remains prudent on the outlook for the industry in the near term given the uncertainties surrounding timing of capital spending by major oil and gas players," it said.

MMHE said the outlook for marine business remains positive as global LNG trade is expected to expand firmly driven by increase of exports from the US and Australia to Asia. In view of the forthcoming implementation of new rules by International Maritime Organization(IMO), the group expects no further deferment by ship owners for dry docking activities in 2019.

MMHE said the group had during the year secured a number of long term offshore fabrication frame agreements which are on call-out basis including the long term agreement (LTA) signed with Saudi Arabian oil company (Saudi Aramco).

"These are expected to contribute positively to the group’s revenue in 2019 and beyond. Meanwhile, the group remains committed to replenish its orderbook in various geographical areas. Effort to ensure competitiveness of ongoing and future bids are continuing and remains a priority," it said.