Boustead Heavy’s Q2 net profit slips 5% from a year ago

PETALING JAYA: Boustead Heavy Industries Corp Bhd (BHIC) net profit for the second quarter ended June 30, 2017 fell 5.2% to RM23.94 million from RM25.26 million a year ago on lower revenue but high operating costs.

Its revenue dropped 37.2% to RM43.77 million from RM69.75 million in the previous year’s corresponding quarter as the higher revenue recorded in last year’s corresponding quarter was largely attributable to approved variation orders for the oil and gas’s Belum Topside project.

For the six months period, BHIC’s net profit rose over fourfold to RM26.65 million from RM6.22 million a year ago on higher share of profits from associates and joint ventures as well as the absence of a RM6.8 million loss from discontinued operations in the same period a year ago.

Revenue was RM120.61 million, 9% lower than RM132.74 million previously.

BHIC said despite the Malaysian government’s announcement of a cut back in its defence spending in the current year’s budget, the group expects the contracts awarded recently to the joint venture companies to contribute positively towards its future earnings.

“In addition, the group will continue to pursue potential contracts with parties other than the Ministry of Defence such as the Royal Malaysian Police and Malaysian Maritime Enforcement Agency as well as overseas,” it added.

Commercial shipbuilding looks set to continue to come under pressure from low demand for ships, tonnage overcapacity, tight financing, low oil prices and uncertain economic global outlook. This will continue to put pressure on shipyards which are already reeling from thin orderbooks and cancelled deliveries.

It added that crude oil prices continue to be volatile. The trend of oil majors scaling down on capital expenditure is expected to continue and pose challenges to players in the oil and gas industry for the major part of the year.

BHIC closed 2.49% higher yesterday at RM2.21 with 9,400 shares traded.