Boustead Heavy’s Q3 net profit triples

PETALING JAYA: Boustead Heavy Industries Corp Bhd’s (BHIC) net profit for the third quarter ended Sept 30, 2016 more than tripled to RM14.88 million from RM3.94 million a year ago due to a profit from discontinued operation.

In a filing with Bursa Malaysia yesterday, the group reported a profit of RM2.37 million from discontinued operation during the quarter compared with a loss of RM6.79 million a year ago.

Under discontinued operation, the chartering segment posted a higher profit due to over accrual of operating expenses pursuant to the reconciliation of expenses with the former ship manager.

Revenue for the quarter rose 11.10% to RM64.31 million from RM57.88 million a year ago, driven by defence-related maintenance, repair and overhaul (MRO) activities.

BHIC said its joint venture (JV) companies posted a lower contribution during the period, with contribution mainly from Contraves Advanced Devices Group undertaking the Littoral Combat Ship project.

“However, the impact was cushioned by the tax exemption granted by the Finance Ministry on the submarine projects undertaken by Boustead DCNS Naval Corp Sdn Bhd,” it said.

Its associates posted a higher share of losses of RM24.5 million during the period due to variation orders for the shipbuilding project, additional cost to completion for the restoration of KD Perantau, additional staff costs incurred under the mutual separation scheme, lack of commercial MRO of foreign boats and local ferries and no new shipbuilding projects.

There were also fewer Royal Malaysian Navy vessels entering the yard for repair works.Moving forward, the group expects various contracts in hand to contribute towards its future earnings. These include the supply of Littoral Mission Ships to the Royal Malaysian Navy and a human capital development programme for trainees from the Royal Malaysian Navy and the group.

In addition, the group’s associate BN Shipyard held a Keel Laying Ceremony in March for the first of six units of LCS being built at the yard for the Royal Malaysian Navy.

“The construction of the blocks and systems and engineering integration development activities of the first unit of the LCS is currently on-going and the construction for the second unit has started. The first ship is expected to be delivered in 2019 and the remaining five ships will be delivered at regular intervals thereafter,” it said.

The group said it will also continue to source for new oil and gas projects amid the improving industry landscape.

For the nine months ended Sept 30, 2016, net profit fell 1.96% to RM21.10 million from RM21.52 million a year ago while revenue for the period rose marginally to RM197.05 million from RM196.43 million a year ago.