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MMHE turns in small Q2 loss as orders dry up

MMHE turns in small Q2 loss as orders dry up
As expected with the softening of the oil and gas (O&G) sector, Malaysia Marine and Heavy Engineering (MMHE) fell into the red in Q2 as heavy engineering orders slumped.

The Malaysian shipyard group turned in a second quarter net loss of MYR2.5m ($641,277) from a net gain of MYR18.2m in the previous corresponding quarter. Revenue fell by almost half to MYR297.4m from MYR582.1m a year ago.

Hit by fewer jobs and lower values project works in progress, the key heavy engineering segment posted operating loss of MYR25.6m from an operating profit of MYR6.5m previously.

The operating profit from the marine segment were impacted by the lower number of rig repairs and conversion and plunged to MYR4.2m from MYR19.4m previously.

For the first half ended June 30, net losses widened to MYR10.5m compared with a net profit of MYR54.2m in the previous corresponding period. Revenue fell 57.4% to MYR554.2m from MYR1.3bn.

“The outlook for the heavy engineering business remains sluggish as the downturn in the upstream sector is expected to persist at least for the next 12 months,” acting ceo Wan Mashitah Wan Abdullah Sani said.

“Significant heavy engineering project cancellations and deferments will result in under-utilisation of assets, which may be subject to impairment tests.”

She noted however that the company’s initiatives to diversify into other areas including piping, mechanical and structural works for the onshore segment, hook-up and commissioning as well as facilities maintenance projects had partly replenished the order book for the short term.

She added that the marine repair and maintenance work would provide a slight reprieve against the slowdown of the heavy engineering business.

Mashitah said the company had been evaluating several initiatives to expand its marine business in the medium to long term to balance the portfolio mix.