Boustead Heavy Industries earnings down in Q2

PETALING JAYA: Boustead Heavy Industries Corp Bhd’s net profit for the second quarter ended June 30 declined by 69.85% to RM7.21 million from RM23.94 million a year ago, due to lower defence-related maintenance, repair and overhaul (MRO) activities, negative contribution from the associates and higher taxation.
Revenue fell 12.31% to RM49.16million from RM43.77 million
“It is encouraging to see that the new government is determined to maintain the nation’s maritime sovereignty. This would require RMN to be at its optimal state of readiness to support Malaysia’s foreign policy and naval diplomacy. We believe this bodes well for our shipyards and business units involved in MRO of naval assets and we foresee sustained business coming from the RMN’s 15 to 5 transformation programme. The construction of the first four of six LCS by our Associate is currently ongoing, with the keel laying of LCS4 is targeted to be held later this year. In addition, our Associate is making good progress on the Littoral Mission Ship project which is currently at an early construction stage,” its board of directors said.
The contracts awarded to the group for the ISS of the RMAF EC725, ISS of the RMN FENNEC AS555SN helicopters, the supply and delivery of RMN’s Communication Suite for Squadron 23rd Frigate and the ISS for the RMN’s Prime Minister’s Class Submarines are expected to contribute positively towards its future earnings. The acquisition of shares in Airbus Helicopters Simulation Centre Sdn Bhd is expected to strengthen the group’s relationship with Airbus, leading to the opening up of potential business collaborations particularly in the Malaysian aviation industry,” it added.
Whilst the group is guardedly optimistic about the prospect of the defence sector, it remains cautious on the outlook for commercial shipbuilding and energy sector.
Despite signs of recovery in crude oil prices, the outlook for the oil industry remains bearish as oil majors scale back exploration and production activities which result in the commissioning of only a handful of new offshore structures.
This, it said, will continue to put pressure on yards already reeling from the lack of fabrication work, hence it does not expect much business related to oil and gas industry at its yards, until the industry fully recovers.
For the period of six months, its net profit more than halved to RM 11.71 million from RM26.65 million.
Revenue for the cumulative period fell 26.31% to RM88.87 million from RM120.61 million.