PETALING JAYA: After posting a negative bottom line in its previous financial year (FY), Malaysia Marine and Heavy Engineering Bhd (MMHE) will continue to explore opportunities in the domestic and international markets.
With the recent award of a novel offshore windfarm project, the group said it would focus on pursuing renewable energy or RE projects and those in the decarbonisation space.
“In consideration of the global supply chain issues, the group has taken steps to improve its contracting strategies with clients where possible through alliance concept, reimbursable or cost-plus basis to mitigate those issues,” it said in a filing with Bursa Malaysia.
On outlook, the group said the heavy engineering segment continued to face challenges in executing ongoing projects within the original budget due to the rising costs of raw materials and global supply chain disruptions.
“The projects, awarded on a lump sum engineering, procurement, construction, installation and commissioning basis by clients a few years ago, face ongoing efforts to recover from the inflationary and schedule impacts.
“The group will continue pursuing the recovery of these impacts from clients,” it said.For the marine segment, the group expects competition among peers to remain stiff, given the presence of new liquefied natural gas (LNG) carrier-repair yards in China and other neighbouring countries.
Despite that, the group is continuing with the efforts in securing more dry-docking opportunities with major LNG players, as well as conversion projects, given the uptrending oil prices and stabilised oil and gas market.
In the fourth quarter ended Dec 31, 2023, MMHE’s net profit fell to RM6.18mil from RM27.14mil in the same quarter in 2022, representing an earnings per share of 0.4 sen as compared to 1.7 sen.
The group reported revenue of RM1.2bil, which was more twice the revenue of RM424mil in 4Q22, on the back of higher contributions from the heavy engineering segment.
In its performance review, MMHE said despite the higher revenue, the heavy engineering segment’s operating profit in 4Q23 was nearly halved year-on-year (y-o-y) to RM7.4mil, as a result from the partial recognition of cost recovery claims negated by the additional cost provisions for an ongoing project during the quarter.
The marine segment also posted significantly lower operating profit of RM2mil as compared to RM22mil in the same quarter in 2022 due to lower margins amid stiff competition.
Over the full financial year ended Dec 31, MMHE posted a net loss of RM484.19mil compared with a net profit of RM67.77mil in FY22, while revenue rose to RM3.31bil from RM1.65bil in the previous year.
It said the year under review was impacted by additional cost provisions recognised for ongoing heavy engineering projects while the weakening of the ringgit against the US dollar had negatively impacted the hedging of receivables for a heavy engineering project.