KUALA LUMPUR (Nov 23): Boustead Heavy Industries Corp Bhd (BHICB), a company that provides services to the maritime industry, saw profit soar by 53% to RM11.87 million in the third-quarter ended Sept 30 of financial year 2018.

The increase of 53% from RM7.76 million a year ago was mainly due to profits recognised upon finalisation of the submarines’ Extended In-Service Support (ISS) 2 Contract with the Royal Malaysian Navy (RMN).  

In a statement today, its Executive Deputy Chairman and Managing Director Tan Sri Datuk Seri Ahmad Ramli Mohd Nor said that BHIC was able to record improved results mainly due to its transformation efforts.

Ramli was referring to the group undertaking fewer activities in the defence-related maintenance, repair and overhaul activities (MRO) segment, lower negative contribution from its Energy Division and higher taxation.

“We were able to record an improved profit for the 3Q18 fiscal year. Our performance is testament to BHICB’s resilience as a leading defence contractor in Malaysia,” he said.

Ramli added that the BHICB is pleased with the progress achieved for the Littoral Combat Ship and Littoral Mission Ship projects.

“The group’s results were positively impacted by additional profit derived from KD Mahawangsa as well as MRO works on foreign registered boats.

Its revenue slightly dropped to 4.43% to RM61.42 million from RM64.26 million a year ago due to lower defence-related MRO activities.

For the cumulative nine-month period (9M18), its profit decreased to 31.44% to RM23.59 million from RM34.4 million a year ago. This is due to lower MRO activities, negative contribution from the associates, lower negative contribution from the energy segment and higher taxation.

For its revenue, the group recorded a decrease of 18.72% to RM150.3 million from RM184.87 million a year ago. The lower revenue was largely attributable to lower defence-related MRO activities.

Meanwhile for its prospects, BHICB said that the contracts awarded to the group for the ISS of the Royal Military Air Force EC725 (full flight simulator training services), ISS of the RMN FENNEC AS555SN helicopters, the supply and delivery of RMN’s Communication Suite for Squadron 23rd Frigate and the ISS for the RMN’s Prime Minister’s Class Submarines are expected to contribute positively towards its future earnings.

“The Government’s commitment to safeguard the nation’s maritime sovereignty and promote defence diplomacy as a key component of Malaysia’s foreign policy bodes well for the industry.

“This commitment coupled with the ongoing 15 to 5 feet transformation programme of the RMN would require modern, formidable and fit-for-purpose assets which the group is capable of building and servicing,” he said.

Ramli added that the group is pleased with the financial performance to date despite the fact that market dynamics are challenging, particularly with fluctuating crude oil prices and the challenge to keep costs down.

“Nevertheless, the group is committed to strengthen its resolve and deliver for our shareholders and stakeholders,” he said.

At market close, BHICB’s share price was up 3 sen at RM1.35, making its market capitalisation RM335.42 million.