KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB), a subsidiary of MISC Bhd, saw its net profit fall 84% to RM16.48 million for the fourth quarter ended Dec 31, 2014 (4QFY14) from RM102.03 million a year ago, on lower profit contribution from its offshore and marine business segments.
Revenue for 4QFY14 also dropped 30% to RM508.34 million from RM726.31 million in 4QFY13. Earnings per share (EPS) was one sen compared with 6.4 sen a year ago.
“Offshore [segment] registered lower revenue and operating profit [for 4QFY14] as contribution from ongoing projects were relatively lower against the corresponding quarter which was predominantly attributed to projects which have subsequently sailed away or nearing completion,” MHB (fundamental: 1.4; valuation: 1.8) said in a filing with Bursa Malaysia yesterday.
Its marine segment also posted relatively lower profit for 4QFY14 due to the reversal of provision for a completed project in 4QFY13.
The weak quarterly results pulled down the group’s net profit for the full financial year, which declined 45% to RM129.93 million from RM236.47 million in FY13, while revenue fell 6% to RM2.7 billion from RM2.88 billion. EPS for FY14 dropped to 8.1 sen compared with 14.8 sen in FY13.
MHB said higher expenses in FY14, coupled with the delivery of some of its projects under its offshore segment, translated into lower profit for the segment.
“During the year, the group has successfully delivered FPSO (floating production, storage and offloading) Cendor to MISC, Tapis R topsides to Exxon Mobil Exploration and Production Malaysia Inc, and Kebabangan topsides to Kebabangan Petroleum Operating Co Sdn Bhd,” it added.
Its marine segment also reported lower profit for FY14 as revenue fell due to lower value per vessel repaired. The segment also saw higher operating costs during the year.
Going forward, MHB warned that the performance of its offshore segment will be underpinned by its current projects in hand, adding that it will be challenging to secure the order book in view of the current uncertainty in the oil and gas (O&G) industry.
“Over the last six months, the oil price has dropped from US$120 (RM429.60) per barrel to US$54 (Brent as at Wednesday), making 2015 a challenging year for the O&G industry,” said MHB.
In a statement yesterday, MHB managing director and chief executive officer Dominique de Soras said 2015 will be another challenging year.
“Major resource owners and O&G operators will be cutting back on some of their investments to cope with reduced revenue as currently dictated by low oil prices. This will invariably impact our industry and will once again force us to be even more cost conscious and vigilant in our spending,” he added.
MHB’s share price closed 3.77% lower at RM1.53 yesterday, bringing its market capitalisation to RM2.42 billion.
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This article first appeared in The Edge Financial Daily, on February 6, 2015.