MMHE back in black in 1Q’20

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) posted a net profit of RM6.13 million for its first quarter ending March 31, an improvement from a net loss of RM29.37 million reported in the corresponding quarter of the previous year, mainly due to higher revenue and improved performance from its heavy engineering and marine segments.

Revenue for the period jumped by 70.6% to RM346.44 million from RM203.11 million reported previously.

According to the group’s Bursa filing, the heavy engineering segment reported an operating profit of RM1.2 million in the quarter, compared to an operating loss of RM23.9 million previously, mainly attributed to reversal of cost provisions in the current quarter.

Meanwhile, the group’s marine segment registered a reduced operating loss of RM1.5 million for the period compared to a RM7.5 million loss reported previously, due to a higher revenue from LPG vessels and conversion work.

In regards to outlook for the year, MHB acknowledged that the Covid-19 pandemic had caused global demand and oil prices to plummet at an unprecedented rate and most oil majors have started reducing their annual capital spending and revising their investment plans to counter the negative financial impact amidst the grim landscape.

The subsequent oil production cut agreed by OPEC+ to mitigate the oil price crash did not result in any significant recovery in prices.

“The group expects the risks of deferments and scale-down of upstream projects to prolong and continue to pose challenges to the industry for the remainder of the year. In light of the risks, the group remains cautious on the remaining opportunities despite Petronas’ announcement of its intention to maintain domestic capital spending plans,” it said.

MHB also noted that the outlook for marine repairs and dry-docking activities remains uncertain, despite an increase in demand for oil storage including floating storage and tankers.

With regards to the impact of the movement control order (MCO), the group expects significant disruptions to the global supply chain and logistics which may potentially impact the supply of materials, equipments and resources related to the execution of the projects it has in hand.

This may lead to sourcing for alternatives which may have cost and schedule consequences.

In view of the current crisis, MHB conceded that it faces significant risks to its financial results and position including potential impairment of assets.

“However, at the present time, the group is unable to fully assess and quantify the impact as discussions are still ongoing with clients and key stakeholders on the way forward,” it told Bursa.

“Nevertheless, the group remains focused on resource optimisation to reduce its operating cost in line with the challenging outlook of the industry.”

MHB revealed that it is continuing its efforts to replenish its orderbook by diversifying into new business opportunities, namely onshore and renewable segments.

source https://www.thesundaily.my/business/mmhe-back-in-black-in-1q-20-NN2348870