KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) saw its net loss narrow 84% to RM4.48 million in the fourth quarter ended Dec 31, 2014 (4QFY14) from RM28.06 million a year ago, due to steady progress of the littoral combat ship (LCS) project, which largely offset provisioning in certain joint-venture companies.

Revenue for 4QFY14 increased 7.5% to RM120.01 million compared with RM111.65 million a year ago. Loss per share fell to 1.8 sen compared with 11.29 sen in 4QFY13.

Full-year (FY14) earnings jumped 464.7% to RM17.85 million from RM3.16 million in FY13, while revenue increased 4.3% to RM332.82 million from RM319.05 million. Earnings per share stood at 7.18 sen for FY14 compared with 1.27 sen in FY13.

Apart from the progress of its LCS project, BHIC (fundamental: 0.2; valuation: 0.6) noted that the leap in its full-year earnings was also due to no impairment to the group’s chemical tankers, lower finance cost and profit contribution from associates.

Revenue in FY14 also improved due to higher contribution from the company’s heavy engineering segment, as its Belum satellite topsides facilities for Murphy’s Sarawak gas development project saw progress.

BHIC’s unit Boustead Penang Shipyard Sdn Bhd, in March last year, secured a RM108 million contract from Murphy Sarawak Oil Co Ltd for the fabrication of offshore topsides for Block SK309 Belum Satellite-A Platform in phase two of the Sarawak gas development project.

However, BHIC noted that despite higher charter rates and favourable exchange rates, the chartering segment continued to record losses due to higher operating expenses and periodic dry docking expenses incurred on its chemical tankers.

BHIC said it would expand cautiously into the oil and gas business which is sustainable, noting that the Belum satellite project is expected to be delivered in the first half of this year.

It also noted that all its Chulan tankers are now under a bareboat charter agreement, reducing managing and operating costs under the chartering segment.

“The heavy engineering segment will continue to drive the BHIC group’s performance through defence-related maintenance, repair and overhaul activities,” the filing read.

In a statement, BHIC executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said FY14 had been a “challenging year” for BHIC and that the group is glad to have registered an improved profit of RM17.9 million, a trend which it is “cautiously optimistic” will continue in the coming quarters of FY15.

BHIC shares closed down 0.45% at RM2.22 yesterday, giving it a market capitalisation of RM534.18 million.

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This article first appeared in The Edge Financial Daily, on February 27, 2015.