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MMHE Q3 profit down more than half to $4m

MMHE Q3 profit down more than half to $4m
Malaysia Marine and Heavy Engineering Holdings (MMHE) saw third quarter net profit fall 57% to MYR17.0m ($3.9m)from MYR39.1m previously due to lower contributions from the offshore segment, the offshore fabrication specialist said in a stock market announcement.

Revenue was also 19.2% lower at MYR436.3m compared with MYR539.8m in the same quarter last year.

The key offshore segment saw revenue plunge by almost half to MYR302.3m from MYR507.4m previously due to completion of most projects while additional cost provisions for the Malikai TLP project saw the segment turn in an operating loss of MYR24.3m from a MYR16.1m profit previously. MMHE said it is actively pursuing the compensations and claims for this project. Meanwhile new projects have yet to see revenue being recognized.

The marine business made up somewhat for this, tripling revenue to MYR 134m from MYR39.3m previously albeit from a relatively low base while high margins from higher-end LNG, FPSO and FSU vessel repair work helped bump up segment profit to MYR24.7m from just MYR3.2m previously.. For the year-to-date, MMHE posted a 37.4% decline in net profit to MYR71.0m compared to MYR113.5m in the previous corresponding period. Revenue for the first nine months was also lower at MYR1.74bn compared with MYR2.19bn in the same period of last year.

Looking ahead, the group expects the downturn in the upstream oil and gas industry to be protracted. “This adverse market scenario will have an impact on the offshore business unit. Significant offshore project deferments will result in under utilisation of assets, which may be subjected to impairment tests,” it said.

The group expects the marine segment to remain strong and to somewhat cushion the negative impact from the major downturn in the offshore business.