Malaysia Marine and Heavy Engineering's net loss widens in Q2 on impairment

Malaysia Marine and Heavy Engineering’s net loss widens in Q2 on impairment

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) saw its net loss widen to RM397.02 million in the second quarter ended June 30, 2020 from RM9.48 million a year ago, mainly due to recognition of impairment loss amounting to RM300 million.

In the group’s exchange filing, the impairment is attributable to the collapse in demand for oil and energy owing to the Covid-19 pandemic resulting in most oil and gas companies deferring their upstream projects and cutting their capital spend.

“Moreover, the impairment is deemed necessary in anticipation of a prolonged recovery in the industry resulting from these exceptional events,” it said.

The group recorded revenue of RM155.31 million in the current quarter, which decreased 43.8% from RM276.45 million in the corresponding quarter last year, mainly due to lower revenue in both its heavy engineering and marine segments.

For the six month period, its net loss widened to RM390.89 million from RM38.84 million in the prior period, while revenue was RM501.75 million was 4.6% higher than RM479.56 million previoisly.

While the group has resumed its yard operations from April 2020, its activities are still constrained by the “new normal” with restrictions imposed to ensure that the pandemic is kept under control.

“Given the prolonged oil market recovery outlook, the group expects postponement of upstream projects and capital spending cuts by oil majors to persist and thus remains cautious on the prospect of securing orders for the remainder of the year,“ MMHE said.

It also noted that the slump in global liquefied natural gas (LNG) demand and trade will impact its marine repair segment.

Moreover, steeper competition posed by China and Singapore firms vying for the limited number of jobs available amidst the current situation would further affect the group’s marine business. As such, the group expects marine business to remain uncertain for the rest of the year.

In line with the current challenging industry landscape and outlook, the group said it will continue to focus on cost management to optimise operating costs.

‘The group is also prioritising execution and safe delivery of ongoing projects. Additionally, the group continues to intensify the pursuit of business opportunities in other segments in an effort to replenish its order book.”

source https://www.thesundaily.my/business/malaysia-marine-and-heavy-engineering-s-net-loss-widens-in-q2-on-impairment-LF3117085