MHB eyes onshore fabrication jobs

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB), which is focusing more on smaller jobs to sustain its operations, is expanding to the downstream and onshore segments, said its chairman Datuk Nasarudin Md Idris.
He said the group, which has traditionally been involved in offshore fabrication projects, wants to be more involved in onshore fabrication projects and is eyeing jobs from the Rapid project such as simple fabrication jobs involving piping. It also aims to be a subcontractor for the main contractors of the Rapid project.
"It will not be as material as projects like Malikai Tension Leg Platform and SK316 Wellhead Platform but during these tough times, the ability to sustain ourselves and to keep our workforce going is very important. We have 3,800 people working in the yard and we have quite a huge overhead we have to cater for," he told reporters at its AGM yesterday.
He said MHB is also looking at the possibility of venturing into the petrochemical industry.
"MHB has largely been dominant in handling large fabrication jobs with complex structures like what we're doing today, we are handling the Malikai Tension Leg Platform, that's 20,000 tonnes and we are also handling the SK316. These are large complex structures but these sort of structures, these sort of projects do not come every day, sometimes they come quite far in between," said Nasarudin.
He said the group wants to secure more smaller engineering, procurement, construction, installation and commission (EPCIC) projects in order to sustain its large overheads. However, he noted that competition is also intense in the smaller EPCIC market.
He added the outlook for fabricators in the oil and gas market is challenging, with the number of big jobs getting lower while small jobs are overcrowded.
Nasarudin said the group is currently bidding for RM7 billion worth of contracts, of which 60% are overseas projects. It is eyeing opportunities mainly in the Middle East as well as Mozambique, Qatar and Canada.
He noted that they are fairly confident of being competitive in some of the tenders and that the market is "not as hot as it was" though demand is still there. He said there are plenty of jobs in the pipeline but competition is also more intense now.
The group's backlog amounts to RM1.6 billion with earnings visibility until the third quarter of 2016.
It has nearly RM600 million cash with borrowings slightly more than RM200 million.
He said MHB has undergone a transformation programme to improve its efficiency and productivity, including a manpower optimisation programme in 2013 and 2014, offering a mutual separation scheme as the number of jobs had declined.
Nasarudin said it has reduced its headcount by 200 in the last one year. It has a total of 3,800 staff currently, of which 500 are contract workers.
For the first quarter ended March 31, 2015, MHB's net profit rose 4.03% to RM36.03 million from RM34.63 million a year ago while revenue rose 7.15% to RM719.50 million from RM671.46 million a year ago.