Lower revenue, forex losses hit Boustead Heavy

PETALING JAYA: Boustead Heavy Industries Corp Bhd’s (BHIC) net profit slumped 62.05% to RM3.94 million for the third quarter ended Sept 30, 2015 compared with RM10.39 million in the previous corresponding period, due to lower revenue and unrealised foreign exchange losses.
Revenue for the quarter under review went down 20.96% from RM82.14 million to RM64.92 million.
In a filing with the stock exchange the lower revenue was generated in the oil and gas’s Belum Topside project and defence related maintenance, repair and overhaul (MRO) activities.
The chartering segment’s performance, meanwhile, was dampened by unrealised foreign exchange losses resulting from the group’s foreign currency-denominated borrowings to purchase the Chulan tankers in previous years.
BHIC expects a RM153.16 million contract, which was awarded to its joint venture company Boustead DCNS Naval Corporation Sdn Bhd for the provision of the in-service support for two units of the Prime Minister’s class submarines for the Royal Malaysian Navy, will contribute positively to the company’s future earnings.
In addition, the physical construction of the first of six ships for the Littoral Combat Ship (LCS) project has begun this year, with the first in class ship delivery in 2019 and the remaining five ships to be delivered at regular intervals thereafter.
“The group’s associate holds the design rights of the LCS platform, which raises the possibility of the associate company offering it for future projects,” BHIC noted.
However, it said the oil and gas sector will remain challenging in view of the present competitive environment and capital expenditures cut as announced by oil majors.
It expects the heavy engineering segment to continue to drive the group’s performance through defence related MRO activities.
Nine-month net earnings were down 3.64% from RM22.33 million to RM21.52 million on the back of a 4.39% drop in revenue from RM212.81 million to RM203.47 million.