KUALA LUMPUR (Nov 10): After posting a loss of RM23.88 million for the third quarter ended Sept 30, 2021 (3QFY2021), Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) recorded a net profit of RM15.94 million for the same period this year.

In a bourse filing on Thursday (Nov 10), MHB attributed its return to the black to both its marine and heavy engineering segments, which recorded an operating profit for the quarter.

Earnings per share increased to one sen in 3QFY2022, from a loss of 1.5 sen previously.

Revenue increased year-on-year from RM389 million to RM409 million due to contributions from the marine segment.

“Revenue [from the segment] of RM89.1 million was RM30.4 million higher compared with RM58.7 million for the previous corresponding quarter as a result of higher dry-docking activities,” according to the quarterly report.

“In tandem with the higher revenue, the segment posted an operating profit of RM17.0 million for the quarter, a turnaround from an operating loss of RM9.1 million, mainly contributed by the recovery in dry-docking activities since the reopening of borders on April 1, 2022.”

The heavy engineering segment, however, recorded a lower revenue of RM320 million for 3QFY2022, from RM330 million a year ago.

“The segment achieved an operating profit of RM1.4 million for the quarter, against an operating loss of RM13.1 million previously, mainly due to the recovery of Covid-19 claims for an ongoing project,” the company said.

Year-to-date revenue increased to RM1.22 billion from RM1.03 billion a year ago.

“The group posted an operating profit of RM51.1 million for the period, against an operating loss of RM148.3 million for the prior corresponding period, as the latter was impacted mainly by additional cost provisions recognised for an ongoing heavy engineering project.

“The improved financial performance was also contributed by the recovery of Covid-19 claims, coupled with the reversal of cost provisions for both ongoing and post sail-away projects," the company said.

On its prospects, MHB expects oil prices to remain strong, after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to cut production to stabilise the oil market, along with the Russian invasion of Ukraine.

“As such, capital spending by oil majors is expected to remain steady in the medium to long term. Growth in the renewable energy space also represents opportunities for MHB.

“However, prolonged global supply chain disruptions and rising production cost could still adversely impact heavy engineering business prospects," it said.

Moreover, the company said the reopening of borders had allowed entry of technical specialists, which impacted positively on marine operations and contributed to the segment’s significant turnaround.

“High global gas prices and robust liquefied natural gas (LNG) demand from the Far East are expected to persist in view of the upcoming winter.

“As this will lead to growth in LNG trade, more vessel owners are anticipated to defer dry-docking, and thus create stiffer competition among shipyards for the limited dry-docking opportunities,” it said.

MHB said it aims to replenish its order book by capturing opportunities in local and international markets, while continuing to prioritise “effective cost management, and improving project execution and delivery through prudent investment in technology, people, processes, systems, digitalisation and automation".

At the time of writing, MHB’s share price remained unchanged at 43 sen.