Boustead Heavy Industries returned to profit in Q1

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) recorded an improved performance for its first quarter ended March 31, 2017, with net profit of RM2.71 million compared with a net loss of RM19.04 million in the previous year's corresponding quarter, mainly due to its associate companies that saw accelerated progress of the littoral combat ship (LCS) project for the Royal Malaysian Navy (RMN).

The group's joint venture companies also delivered a stronger performance during the quarter, compared to the loss posted in last year's corresponding quarter.

Revenue for the period increased by 22% to RM76.84 million, thanks to higher revenue from defence-related maintenance, repair and overhaul activities.

BHIC's executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said the right-sizing exercise undertaken by the group to identify the optimal organisational structure has borne fruit, as staff size has been rationalised in line with the current operating environment and near-term market prospects.

"A mutual separation scheme offered by the group, involving a total payment of RM10.1 million, has been accepted by 160 personnel thus far, which has led to a reduction in overall employee headcount. This exercise will allow us to enhance efficiencies and reduce staff cost, which will enable us to improve operating cost and subsequently strengthen our bottom line," he said in a statement on Friday.

Moving forward, it is confident that it will be able to maintain its growth momentum, more so with the recent contracts recently awarded to BHIC. This includes the significant contract with the Ministry of Defence for the supply of four units of littoral mission ships (LMS) for the RMN. The first two units of the LMS will be built at a shipyard in China while the next two will be built at Boustead Naval Shipyard in Lumut, Perak.

"In addition, the group will continue to pursue viable contracts with other parties, such as the Royal Malaysia Police and the Maritime Enforcement Agency, as well as in foreign markets," added Ahmad Ramli.