KUALA LUMPUR (May 20): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) posted RM2.72 milion net profit for the first quarter ended March 31, 2022 (1QFY22) from a net loss of RM104.35 million a year earlier, on the back of improved earnings from all its divisions.

In a bourse filing on Friday (May 20), MHB said revenue for the quarter rose to RM417.78 million from RM343.57 million previously.

Earnings per share were 0.2 sen versus loss per share of 6.5 sen previously.

It did not declare any dividend.

Reviewing its performance, MHB said the improved financial performance was also contributed by the partial recovery of Covid-19 claims and reversal of warranty provision for a post sail-away project as well as a reversal of impairment loss on trade receivables as the doubtful debts were recovered in the current quarter.

On its outlook, the company said the reopening of international borders and removal of compulsory quarantine requirements for fully vaccinated travellers by the government are expected to improve marine business prospects.

It said the lifting of restrictions on the entry of foreign technical experts will increase the group's chances to secure more international projects.

"Additionally, other countries that are experiencing a spike in Covid-19 cases and reimposing targeted lockdowns may create opportunities for the group as their clients would have to look for alternative shipyards to conduct repairs.

"Therefore, the group expects the marine business to gradually recover in 2022," it said.

In a separate statement, MHB managing director and chief executive officer Pandai Othman said oil prices have risen sharply on concerns over the Russia-Ukraine conflict coupled with threat of oil demand exceeding supply recovery as many countries move towards COVID-19 endemicity.

"In tandem with the surge in oil prices, an increase in upstream capital expenditure (CAPEX) spending in 2022 is expected by oil majors, though not to the pre-pandemic level in view of the lingering impact of the COVID-19 pandemic," he said.

Pandai nevertheless said global supply chain disruptions and increase in prices of significant raw materials such as steel due to the pandemic and the Russia-Ukraine conflict may constrain clients’ future CAPEX plans as well as pose significant risks to our ongoing bids and current projects under execution.

"As such, we remain cautiously optimistic on the outlook for the Heavy Engineering segment," he said.

At the midday break on Friday, MHB's share price was unchanged at 41 sen, valuing it at RM656 million.