PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) is looking to increase revenue contribution from its marine segment to contend with the low oil price environment, which has seen less activities in the upstream space.
Speaking to reporters after the company’s AGM yesterday, chairman Datuk Nasarudin Md Idris said the company is targeting higher revenue of RM640 million from the marine segment in 2016, compared with RM466.7 million in 2015. Currently, the marine business contributes about a quarter of the company’s topline.
He acknowledged that the budget cut by Petroliam Nasional Bhd (Petronas) has impacted MHB, which is highly dependent on the upstream offshore business.
“At the same time, small projects will also be highly contested. So we’ve got to look at diversification to get new stream of income,” he noted.
With further expansion into the marine business, he noted that the group is also considering to construct a third dry dock at its Pasir Gudang shipyard.
MHB’s net profit fell 66% to RM43.89 million for the financial year ended Dec 31, 2015 against RM129.93 million a year ago, mainly due to a provision for impairment on the goodwill and assets amounting to RM99.8 million.
For 2016, Nasarudin is unsure if the company needs to make an impairment provision further, saying it will depend on the industry outlook.
“It’s normal to make provision according to the financial reporting standard. If the outlook improves, some of these amount may be written back except the goodwill,” he said, noting that there was no provision made in the first quarter of the year.
However, Nasarudin is of the view that the current situation is not going to improve very soon due to the continued oil glut.
The company had an order book of RM1.1 billion as at end-December 2015. It is also tendering for RM2.8 billion worth of contracts.
Commenting on manpower optimisation, Nasarudin said MHB’s total workforce has come down to 3,200 compared with 4,300 at the end of 2014 due to the non-renewal of its contract staff following lesser jobs available.
Apart from that, the company has also undertaken mutual separation scheme for its permanent staff, which he said the number of employees involved is not significant.
Whether there will be more cuts in manpower, he said it will depend on the workloads.
On another note, Nasarudin said MHB needs “some time” to look for a new managing director and CEO to replace outgoing Datuk Haji Abu Fitri Abdul Jalil, who has been called back to Petronas pursuant to the internal reorganisation exercise. The management changes will take effect from May 1.
“We’re keeping our mind open, it can be someone from outside, it can be internal candidate,” he said when asked if acting CEO Wan Mashitah Wan Abdullah Sani will be promoted as CEO.
MHB (5186) - Malaysia Marine and Heavy Engineering (MHB) : Marine segment boost
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