MMHE posts RM22.7m 3Q18 net loss


Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) recorded a net loss of RM22.72 million in the third quarter ended Sept 30, 2018 (3Q18), against a RM16.21 million net profit in the previous year, due to a high operating loss in its divisions.

In an exchange filing yesterday, MMHE stated that its heavy engineering division recorded an operating loss of RM4.08 million in the quarter, while its marine division posted an operating loss of RM15.99 million.

“Heavy engineering re- corded an operating loss of RM4.1 million against a RM1.8 million loss in the corresponding quarter, mainly due to additional cost provisions made for ongoing projects in the current quarter.

“Marine recorded a RM16 million operating loss against a RM17 million profit in the corresponding quarter, mainly due to additional costs incurred on conversion works, where revenue recognition is still pending verification and approval with clients, and compressed margins for dry docking activities in the current quarter,” the filing read.

In addition, the group recorded a marginal loss from its share of results in joint ventures in the current quarter.

However, the marine and heavy engineering services provider’s revenue for the quarter rose 34.57% to RM289.8 million from RM215.35 million in 3Q17, with higher revenue recorded in both segments.

The heavy engineering segment’s revenue of RM178.4 million in 3Q18 was 52% higher than the RM117.6 million re- ported a year ago, mainly due to higher revenue from an ongoing project during the three months.

The marine segment’s revenue of RM111.4 million was slightly higher than the 3Q17 revenue of RM97.7 million, mainly due to higher revenue from conversion works, as well as dry docking activities in the current quarter.

With oil prices hovering between US$70 and US$80 (RM333.72) per barrel, the group expects to see improvement in offshore spending by oil majors.

While the oil price movement augurs well for orderbook replenishment, the group is not expecting a significant contribution from the heavy engineering segment for the remaining of this year.

However, the group’s marine repair activities in the coming year is expected to improve on the impending compliance to the International Maritime Organisation fuel sulphur cap ruling by January 2020.

“While the group is optimistic of maintaining the current level of marine repair activities for the final quarter of this year, the marine segment’s performance has been affected by deferment of dry dockings by clients in the first half of this year, as well as protracted claim discussions with marine conversion clients.

“As the industry outlook continues to be challenging in the current financial year, the group remains cautious and will focus on replenishing its orderbook in various geographical areas,” the filing read.

MMHE said efforts to ensure competitiveness of ongoing and future bids are progressing and remains a priority.