KUALA LUMPUR (May 17): Boustead Heavy Industries Corp Bhd's (BHIC) net profit jumped 65.9% to RM4.5 million in the first quarter ended March 31, 2018 (1QFY18) from RM2.71 million a year ago, on higher contribution from its joint venture (JV) companies.

In a statement today, BHIC said its JV companies posted a contribution of RM2.6 million in 1QFY18 compared with RM1.8 million in 1QFY17, owing to favourable foreign exchange translations arising from trade payables.

"The group's commercial segment also narrowed its pre-tax loss to RM431,000 from RM1.1 million a year ago. The segment's improved results can be attributed to new maintenance, repair and overhaul (MRO) works on foreign boats, local ferries and government vessels that were executed by its associates," it added.

This resulted in the group posting higher earnings per share of 1.81 sen in 1QFY18 compared with 1.09 sen in 1QFY17.

Quarterly revenue, however, dropped 48.3% to RM39.72 million from RM76.84 million a year ago on the absence of defence-related MRO activities in 1QFY18.

On prospects, BHIC said while the group is guardedly optimistic about the prospect of the defence sector, it remains cautious on the outlook for commercial shipbuilding.

"Over-tonnage, tight financing and uncertain economic outlook will continue to underpin shipyards, which are already dealing with thin orderbooks and cancelled deliveries of commercial vessels," it said.

BHIC is also cautious on the prospect of the energy sector despite signs of recovery in crude oil prices. "The outlook for the oil industry remains bearish as oil majors including Petroliam Nasional Bhd scales back exploration and production activities which results in the commissioning of only a handful of new offshore structures. This will continue to put pressure on yards already reeling from the lack of fabrication works," it added.

Looking ahead, BHIC executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said the group is on track to maintain its growth momentum and is focused on securing additional contracts from the Royal Malaysian Navy for the commissioning of new ships as well as for MRO works on existing ships.

"The group will also continue exploring prospects with other government agencies such as the Royal Malaysia Police and the Malaysian Maritime Enforcement Agency, as well as exploring new business opportunities abroad," he added.

BHIC shares closed unchanged at RM1.87 today, for a market capitalisation of RM464.62 million.