By FARA AISYAH & MARK RAO / Pic By MUHD AMIN NAHARUL

MALAYSIA Marine and Heavy Engineering Holdings Bhd (MMHE) has returned to profit for the fourth quarter ended Dec 31, 2017 (4Q17), despite reporting lower revenue.

The offshore and marine service provider posted a net profit of RM48.13 million compared to a net loss of RM119.67 million a year ago.

In an exchange filing to Bursa Malaysia yesterday, MMHE reported a revenue of RM247.9 million against the RM303.6 million achieved in the corresponding quarter.

The company’s heavy engineering division’s revenue for the three months was RM162.3 million, 6% lower than RM172.8 million recorded in the corresponding quarter as a result of the completion of several offshore projects in the first half of the financial year, as well as onshore projects that are nearing completion in 4Q17.

However, the segment recorded an operating profit of RM11.6 million against a RM34.4 million loss, attributed mainly to the finalisation of completed projects in the quarter under review.

The marine division’s revenue of RM85.7 million was 34% lower compared to the revenue of RM130.8 million in the corresponding quarter. The figures were a result of the lower value and number of vessels repaired in the current quarter.

Following the decrease in revenue for the segment, operating profit of RM12.1 million was RM37.3 million lower than the corresponding quarter’s profit of RM49.4 million.

In addition, MMHE posted a share of profit of RM2.8 million in joint ventures against a RM4.8 million loss in the corresponding quarter, mainly due to the reversal of cost provisions in the current quarter.

For the full financial year, total revenue for the offshore player fell by 19.6% year-onyear to RM956.41 million, despite recovering from a RM134.3 million net loss to a net profit of RM34.23 million.

Meanwhile, the group remains cautious on the outlook for the industry in the near term as there is still uncertainty as to the industry’s capital spending.

MMHE would continue its efforts on cost management and resource optimisation, and is committed to its key strategies, including strengthening its position in existing markets and expanding into new markets.

The group also secured a number of offshore fabrication projects last year, which are expected to contribute positively to MMHE’s revenue in 2018 and beyond.

Since the 2014 crash, which saw oil prices falling from above the US$100 (RM391) per barrel mark to a low of US$28.94 per barrel in early- 2016, the oil and gas (O&G) industry has recovered, as supply and demand dynamics gradually rebalance as oil reserves dip.

Brent oil prices traded between a low of US$66.86 and US$70.52 per barrel over the past month, while oil markets are anticipating prices to trend between US$60 and US$70 per barrel in 2018.

However, capital spending in the O&G industry has lagged behind the oil price rally which was observed since the middle of last year.

“The oil price will have to be sustained at a high level before oil companies resume their capital expenditure (capex), the majority of which will come from oil majors in the market,” TA Securities Holdings Bhd research analyst Abel Goon told The Malaysian Reserve.

“While there has been a pickup in capex in the industry, it is nowhere near the level it was four years back.” He said stability and lesser volatility in oil prices have to occur before confidence can return to the market.

However, he said O&G players should gradually increase their capex in the coming years to maintain activities at reasonable levels.