MMHE shaves two-thirds off its earnings in 2015

MMHE managing director and CEO Datuk Haji Abu Fitri Abdul Jalil

KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) shed almost two-thirds of its earnings for the financial year ended Dec 31, 2015 to RM43.89mil from RM129.93mil in the preceding year.

The decline in in net profit was due to lower contribution from MMHE’s offshore segment as well as the impact from recognition of impairment on both goodwill (RM62.8mil) and assets (RM37mil).

“This is taken in view of the continued depressed outlook for the oil and gas industry with the drop in crude oil prices,” it said in a statement on Wednesday.

However, revenue fell 8.9% to RM2.46bil against RM2.7bil in 2014. 

Offshore registered lower revenue during the year mainly due to lower number of projects secured than anticipated. It recorded lower operating profit of RM9.2mil compared to RM64.7mil a year ago mainly due to additional costs to complete for Malikai TLP. 

Compensations and claims are being actively pursued to improve the financial position of the said project.

Meanwhile, the marine services segment recorded higher revenue and operating profit mainly due to higher value for vessels repaired from LNG, Rigs, FSU and FPSO categories.

For the second year running, the group recorded a full capacity of 15 vessels and rigs in its docks under simultaneous repair and refurbishment works.

“The tough operating environment in the upstream segment is projected to persist well into 2017 as national and international oil companies continue to reduce their spending on capital and operating expenditure. This will continue to impact offshore business,” said managing director and CEO Datuk Haji Abu Fitri Abdul Jalil.

He added that the marine business is projected to remain vibrant as the firm tanker charter rates in the marine segment will somewhat mitigate the slowdown of the offshore unit.

“The group’s effort to diversify has borne results with the recent awards of work in the RAPID projects. MMHE remains committed in executing the strategic plan and initiatives laid out earlier to weather this challenging period,” he said.

MMHE shares closed unchanged at 92 sen on Wednesday.