PETALING JAYA: Boustead Heavy Industries Corp Bhd (BHIC) saw a 72.4% drop in its net profit to RM3.28 million for the third quarter ended Sept 30, 2019 from RM11.87 million in the previous corresponding quarter, dragged down by a variation in milestones achieved from defence-related maintenance, repair and overhaul (MRO) projects, lower contribution from the joint ventures and higher finance costs.
Revenue for the quarter also came in 40.7% lower at RM36.41 million, from RM61.42 million previously, also due to variations defence-related MRO works.
For the nine months ended Sept 30, BHIC’s net profit plunged 91.9% to RM1.92 million from RM23.59 million. Revenue decreased 15.7% to RM126.64 million from RM150.3 million.
In a Bursa Malaysia filing, the group said its commercial segment reported a lower negative contribution of RM7.8 million due to lower operating expenditures.
The defence segment posted a lower contribution of RM31.7 million in the current period as compared with RM59.9 million.
“The energy segment posted a contribution in the cumulative period from the mobilisation of the segment’s resources into a shipbuilding project. However, the contribution was impacted due to higher operating costs.”
It also noted that its finance cost was higher in the cumulative period arising from drawdown of borrowings for working capital needs.
Looking ahead, the group said for its defence business, it would continue to be instrumental in shaping the direction of local naval shipbuilding industry for the long-term.
“The Royal Malaysian Navy’s (RMN) 15-to-5 Transformation Programme is anticipated to be included in the Defence White Paper. We target to fulfil RMN’s requirement by focusing to participate in the construction of the LCS, LMS, multi-role support ships and new generation patrol vessels. The LCS and LMS programme are currently ongoing. The delivery of LMS1 (Keris) is expected to be by the end of 2019.
“The contracts awarded to the group’s joint ventures and associates for the In-Service Support for the RMN’s Prime Minister’s Class Submarines, for refit services for the RMN’s KD Terengganu and for the extension for the integrated maintenance and logistic support services on three units of MMEA Dauphin AS365N3 helicopters to BHICAS, are expected to positively contribute to the group bottom line,” it said.
BHIC also aims to expand its customer base to other government and non-governmental agencies as well as to penetrate Southeast Asia and Middle East markets.
However, it does not foresee new business for its energy segment despite increased capital expenditure spending by oil majors.
