Operating loss drags MMHE’s performance in 2018

It remains committed to replenishing its orderbook in various geographical areas

By FARA AISYAH / Pic By MUHD AMIN NAHARUL

Operating loss incurred in the marine business has further dragged Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) to report a RM25.22 million net loss in the fourth quarter ended Dec 31, 2018 (4Q18), against a RM48.13 million net profit registered in the same period last year.

The fourth consecutive quarterly loss was due to its marine segment’s operating loss of RM32.97 million in the three-month period, against the RM12.06 million operating profit recorded in 4Q17.

The segment’s poor performance was mainly due to insufficient dry docking works to absorb fixed overheads and compressed margins for dry docking activities in the current quarter, MMHE said in a filing to Bursa Malaysia yesterday.

In addition, the heavy engineering segment’s operating profit for 4Q18 also dropped 86% year-on-year (YoY) to RM1.62 million, mainly due to a close-out of a significant project in the corresponding quarter.

In contrast, MMHE’s revenue for 4Q18 increased by 10% YoY to RM273.24 million from RM247.95 million, contributed by higher revenue in the heavy engineering segment.

The heavy engineering segment’s revenue saw a 38% increase to RM224.05 million, mainly due to higher revenue from an ongoing project and commencement of a new order intake in the current quarter.

The marine segment turnover, meanwhile, fell 43% YoY to RM49.19 million in 4Q18 due to lower revenue from conversion works, as well as dry docking activities in the corresponding quarter.

For the financial year ended Dec 31, 2018 (FY18), MMHE fell into the red with a net loss of RM122.69 million against a net profit of RM34.23 million in FY17.

Revenue inched up 2% to RM974.35 million from RM956.41 million.

MMHE said the group remains prudent on the outlook for the industry in the near term, given the uncertainties surrounding timing of capital expenditure by major oil and gas players.

The firm said the outlook for its marine business remains positive as global liquefied natural gas (LNG) trade is expected to expand firmly, driven by the increase of exports from the US and Australia to Asia.

“In view of the forthcoming implementation of new rules by the International Maritime Organisat ion, the group expects no further deferment by ship owners for dry docking activities in 2019.

“The group had — during the year — secured a number of long-term offshore fabrication frame agreements which are on a call-out basis, including the long-term agreement signed with Saudi Arabian Oil Co.

“These are expected to contribute positively to the group’s revenue in 2019 and beyond,” it noted.

The group also remains committed to replenishing its orderbook in various geographical areas.