KUALA LUMPUR (June 10): Boustead Heavy Industries Corp Bhd (BHIC) returned to the black in the first quarter ended March 31, 2020 (1QFY20), boosted by defence-related maintenance, repair and overhaul (MRO) activities.
The heavy engineering services firm posted a net profit of RM20.38 million for the quarter, compared to a net loss of RM4.3 million for 1QFY19, and a net loss of RM118.6 million for 4QFY19.
Quarterly revenue stood at RM44.05 million, up 21.39% compared with RM36.3 million for 1QFY19.
Besides higher revenue from MRO projects, BHIC said the reversal of expected credit losses of RM18.6 million also contributed to the group’s improved financial performance for the quarter.
“Amid adverse effects of the Covid-19 pandemic on the economy, the group takes a cautiously optimistic view towards its business prospects,” it said in a statement today.
“The construction of littoral combat ships and littoral mission ships for the Royal Malaysian Navy ((RMN) and MRO works are ongoing at lower capacity following the safety and health procedures issued by the Ministry of Health (MoH),” it added.
According to BHIC, its associate Contraves Advanced Devices Group recorded lower income as demand from customers dropped amid the Covid-19 pandemic and unfavourable foreign exchange translation of RM3.7 million due to outstanding trade payables.
There was no contribution from associates in the period as losses had been recognised up to the group’s cost of investment in December 2019, it added.
BHIC chief executive officer (CEO) Sharifuddin Md Zaini Al-Manaf said, given the facilities and capabilities of the group‘s shipyards, BHIC is confident of benefitting from RMN’s 15-to-5 Transformation Programme, which has been incorporated in the Defence White Paper, by developing a fit-for-purpose fleet for RMN.
“The group expects the in-service support and refit contracts for RMN’s surface fleet and submarines to continue to contribute positively to its bottom line,” he said.
BHIC is a subsidiary of Boustead Holdings Bhd, a conglomerate listed on the Main Market of Bursa Malaysia. The latter is a subsidiary of the Armed Forces Fund Board. BHIC is involved in maritime, defence and heavy engineering activities, with shipyards located in Lumut and Langkawi.
Shares in BHIC fell one sen or 1.45% to 68 sen today, with 107,900 units changing hands. This valued the firm at RM168.95 million.