KUALA LUMPUR (Feb 5): 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 segments.

Revenue for 4QFY14 also dropped 30% to RM508.34 million from RM726.31 million in 4QFY13.

“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 today.

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.

MHB said higher expenses in FY14, coupled with the delivery of some of its projects under the offshore segment, translated to lower profit for the segment.

“During the year, the group has successfully delivered FPSO 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 would be underpinned by its current projects in hand, adding that it would be challenging to secure the orderbook in view of the current uncertainty in the oil and gas (O&G) industry.

“Over the last six months, oil price has dropped from US$120 per barrel to US$54 (Brent as at Feb 4, 2015), making 2015 a challenging year for the O&G industry,” said MHB.

MHB’s share price closed the morning session 2 sen or 1.26% lower at RM1.57, with 380,400 shares traded, bringing its market capitalisation to RM2.53 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)