KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) has returned to the black in the second quarter (Q2) ended June 30, 2022, chalking up a net profit of RM21.97 million from the net loss of RM34.38 million recorded in the same quarter a year ago.
Revenue in Q2 increased 32.5 per cent to RM400.63 million from RM302.45 million.
For the six months, MMHE registered a net profit of RM24.69 million from a net loss of RM138.73 million, while revenue grew 26.7 per cent to RM818.41 million from RM646.02 million.
In a statement today, the company said its heavy engineering segment reported higher revenue of RM668.3 million compared to RM533.0 million in the prior period, mainly due to higher revenue from an ongoing project.
The segment posted an operating profit of RM4.0 million in the current period, compared to an operating loss of RM105.6 million in the prior period, which had been impacted by additional cost provisions recognised for ongoing projects.
MMHE also contributed to the improved current period's financial performance by reversing cost provisions for post-sail-away projects and the partial recovery of Covid-19 claims.
For the next six months, the ongoing projects in the yard for the heavy engineering segment include engineering, procurement, construction, installation and commissioning (EPCIC) works for the Kasawari Gas Development Project and EPCIC works for the SK408W Jerun Development Project, which was awarded earlier in 2019 and early 2021, respectively.
Meanwhile, the marine segment registered higher revenue of RM150.1 million compared to RM113.1 million in the prior period.
"This was mainly due to higher dry-docking activities in the current period," the company said.
The segment achieved a turnaround from an RM22.6 million operating loss in the prior period to a profit of RM22.7 million, mainly due to the reversal of impairment loss on trade receivables as the company recovered the doubtful debts in the current period, coupled with a higher contribution from the increase in the segment's revenue.
For the same period, the marine segment completed the repair and maintenance of 44 vessels of various categories, of which four were from repair works on liquefied natural gas (LNG) carriers.
The company's total assets and equity at the end of the period under review stood at RM3.4 billion and RM1.7 billion, respectively.
Managing director and chief executive officer Pandai Othman said high oil prices would likely persist for the rest of the year, with oil demand surpassing supply mainly due to sanctions on Russian oil exports.
"In light of the high oil prices, capital spending by oil majors is expected to continue to increase.
"However, prolonged global supply chain disruptions and volatile commodity prices such as steel amidst a sharp rise in global inflation could adversely impact heavy engineering business prospects and the execution of ongoing projects.
"Nonetheless, we remain cautiously optimistic on the outlook for the heavy engineering segment," he said.
Pandai added that the company maintained a cautious stance on the overall industry outlook, focusing on order book replenishment through capturing business opportunities in new regions and segments.
"At the same time, we continue to focus on cost optimisation while maximising value creation to ensure safe and timely execution of ongoing projects," he said.
