KUALA LUMPUR (April 27): The challenging environment in the oil and gas industry continued to cast a spell on Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) as it posted a net loss of RM7.58 million or 0.5 sen loss per share in the first quarter ended March 31, 2016 (1QFY16).
This marked the second consecutive quarter the group sank into the red. In the preceding quarter, it recorded a net loss of RM27.13 million or 1.70 sen per share in 4QFY15.
In 1QFY15, it registered a net profit of RM36.03 million or 2.3 sen per share.
No dividend was declared for the current quarter under review.
Revenue for the quarter come in 64.3% lower at RM256.72 million from RM719.5 million a year ago, mainly dragged down by dismal performance of its offshore segment, which recorded a 77.8% plunge in revenue to RM136.38 million from RM616.28 million a year ago, according to its filing with the stock exchange today.
The segment recorded operating loss of RM26.14 million during the quarter under review as compared to RM1.44 million operating profit a year ago, due to lower backlog as most projects are nearing completion.
MHB is a 66.5%-owned subsidiary of MISC Bhd, which in turn is 62.67%-owned by Petroliam Nasional Bhd (Petronas).
The oil and gas services provider said revenue for the marine segment rose 14% to RM120.34 million from RM105.62 million a year earlier, operating profit improved 0.33% to RM15.01 million versus RM14.96 million in 1QFY15.
MHB said this was mainly due to higher value for vessels repaired from the liquefied natural gas, floating production storage and offloading and floating storage unit categories including settlement of carried forward projects in current quarter.
In a separate statement, MHB managing director and chief executive officer Datuk Abu Fitri Abdul Jalil expects the group's offshore business to remain sluggish in view of challenging environment in the upstream segment.
However, he said the group has over the years taken several initiatives to diversify into other business areas, including piping, mechanical and structural service works for the refinery and petrochemical segment.
MHB has also ventured into hook-up and commissioning as well as facilities improvement and maintenance projects.
"These initiatives have borne positive result with MHB securing contracts in these areas in 2015 and the works are in-progress.
"Intensified marketing and bidding activities are ongoing to replenish the order book, the outcome of which will be subject to final investment decisions by clients to proceed with such projects amidst the low crude oil price scenario," he added.
Commenting on the marine business, Abu Fitri expects the segment to remain positive and that it will, to a certain extent, cushion the slowdown of the offshore business.
He shared that MHB is currently looking at several initiatives to expand the marine repair business to balance its revenue mix.
"MHB (will) continue to focus on its cost management and resource optimisation efforts in line with the outlook of the industry," he added.
MHB has appointed its chief financial officer Wan Mashitah Wan Abdullah Sani as acting chief executive officer (CEO) of the company effective May 1.
This is pending the appointment of a new MD and CEO of MHB as Datuk Abu Fitri Abdul Jalil Abu Fitri, 51, has been called back into the service of MHB's ultimate parent, Petronas, and will relinquish both posts on April 30.
At noon market break today, MHB fell two sen or 1.57% at RM1.25, with 637,800 shares traded. It has a market capitalisation of RM2 billion.
MHB (5186) - Highlight: MHB posts RM7.58m net loss in 1Q
http://www.theedgemarkets.com/my/article/mhb-posts-rm758m-net-loss-1q
