KUALA LUMPUR (July 23): Malaysia Marine and Heavy Engineering Holdings Bhd's (MHB) second quarter net loss widened to RM397.02 million from RM9.48 million a year earlier on lower revenue and after the company registered a RM300 million impairment loss as oil and gas companies deferred their upstream projects amid a Covid-19 pandemic-driven oil demand collapse.

MHB said in a filing to Bursa Malaysia today that revenue slipped to RM155.31 million in the second quarter ended June 30, 2020 (2QFY20) from RM276.45 million a year ago.

MHB, which offers engineering, procurement, construction, installation and commissioning (EPCIC) services to the oil and gas (O&G) industry, and provides ship repair services, said "the impairment is deemed necessary in anticipation of a prolonged recovery in the industry resulting from these exceptional events".

The group has two business segments, namely the heavy engineering and marine divisions.

The heavy engineering division is involved in EPCIC of offshore and onshore O&G structures while the marine segment undertakes repair projects involving offshore facilities and vessels.

In the Bursa filing, MHB said 2QFY20 revenue decreased mainly due to lower revenues in both business segments.

"At the operating profit level, the group reported an operating loss of RM100.2 million compared to RM8.6 million loss in the corresponding quarter mainly due to lower revenue, additional cost provision and associated higher unabsorbed overheads from Covid-19 impact of RM90 million recognised in the current quarter," MHB said.

For the first half of FY20, MHB said cumulative net loss widened to RM390.89 million from a net loss of RM38.84 million a year earlier although revenue was higher at RM501.75 million versus RM479.56 million.

On prospects, MHB said although the group has resumed its yard operations since April 2020, activities are still constrained within the "new normal" as restrictions are still imposed to ensure that the Covid-19 pandemic is kept under control.

"In line with the current challenging industry landscape and outlook, the group continues to focus on cost management to optimise operating costs. The group is also prioritising execution and safe delivery of ongoing projects. Additionally, the group continues to intensify the pursuit of business opportunities in other segments in an effort to replenish its order book," MHB said.

At Bursa today, MHB shares were traded 1.5 sen or 3.8% lower at 38 sen at 3.27pm, valuing the company at RM616 million. The counter saw 3.64 million shares transacted.

MHB's latest reported net assets per share stood at RM1.24.