By NG MIN SHEN / Pic by MUHD AMIN NAHARUL
Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) net loss for the second-quarter ended June 30, 2017 (2Q17) widened to RM13.7 million from a net loss of RM2.56 million recorded a year ago, while 2Q17 revenue dipped 13.5% to RM257.27 million from RM297.44 million registered in the previous year.
The decline in performance was due to its heavy engineering segment comprising mainly offshore and onshore oil and gas (O&G) works, which recorded lower revenue of RM158 million in 2Q17 versus RM217.8 million last year, as most of its ongoing projects are nearing completion.
The segment also recorded an operating loss of RM22.4 million, slightly less than a loss of RM25.6 million in the previous corresponding quarter due to recognition of change orders and finalisation of completed projects in the current quarter.
For the six months ended June 30, 2017 (6M17), the company’s revenue fell 11% to RM493.1 million from RM554.2 million in the past corresponding period, as its heavy engineering segment saw lower revenue from completion of some offshore projects in 6M17, while newly secured projects are still in the early stages.
In an exchange filing yesterday, the group said it also recorded a higher operating loss of RM25.9 million during the six months under review versus a loss of RM4 million previously, caused by lower interest income in the current period and a one-off legal settlement recognised in 6M16.
Its marine segment saw a 9.2% decrease in revenue at RM181.7 million for 6M17 — largely due to lower value of liquefied natural gas vessel repairs — although its profit rose 23.4% on improved margins from ongoing conversion projects.
The O&G solutions provider said its outlook remains challenging as oil prices are not moving in line with the voluntary cuts in production taken by the OPEC and non-OPEC members.
“Shale production activities is still robust, resulting in a supply overload that will keep the price of oil subdued over the year and next. Deferment of upstream projects is expected to prolong and cost-cutting measures will be enhanced further,” it said.
The group said while it has successfully secured several contracts during the period, it is mindful that the majority of the contribution will only be realised in 2018 and beyond.
“Diversification into new revenue streams that provide recurring income is a priority, while efforts to replenish the orderbook continues,” it added.