KUALA LUMPUR: Malaysia Marine And Heavy Engineering Holdings Bhd (MHB) posted a net loss of RM484.19 million for the financial year ended Dec 31, 2023 (FY23) compared to a net profit of RM67.77 million registered in FY22.
However, revenue surged to RM3.31 billion from RM1.65 billion a year ago.
The group said its heavy engineering segment recorded revenue of RM2.99 billion, more than double the RM1.31 billion revenue in the prior year, mainly due to higher revenue from new and ongoing projects.
For the fourth quarter (Q4’23), MHB's net profit fell 77.21% to RM6.18 million from RM27.14 million while revenue increased to RM1.12 billion from RM424 million.
“Despite the significant growth in revenue, at the operating profit level, the (heavy engineering) segment posted an operating loss of RM499.1 million for FY2023, mainly due to the additional cost provisions resulting from the revised schedule and price escalation impact on ongoing projects during the current year.
“In addition, the weakening of ringgit against the US dollar had negatively impacted the hedging of receivables for a project,” the MISC Bhd subsidiary said.
As for the marine segment, its revenue of RM323.9 million in the year under review was RM13 million lower than the prior year's revenue of RM336.9 million, mainly due to lower dry-docking services for liquefied natural gas (LNG) carriers and other vessels during the year.
“The segment reported an operating profit of RM22.5 million in FY 2023, RM39.1 million lower compared to an operating profit of RM61.6 million in the corresponding year.
“Higher profit in the corresponding year was mainly contributed by the higher revenue and margins coupled with recovery of doubtful debts,” it said.
The group disclosed that its total assets increased by RM291.2 million, or 8.7%, mainly due to higher trade and other receivables by RM534 million and the amount was partially offset by a decrease in cash and bank balances amounting to RM239.5 million.
Total equity attributable to equity holders decreased by RM502.2 million or 28.4%, it said, due to comprehensive loss recognised and dividends paid during the year. Total liabilities were higher by RM793.4 million, mainly contributed by the increase in trade and other payables and borrowings amounting to RM739.8 million and RM31.8 million, respectively.
Moving forward, the group is anticipating that the oil market will improve further in 2024, backed by forecast demand and high oil prices amid limited supply from continued production cuts by the Organisation of the Petroleum Exporting Countries and its allies (Opec+).
On project execution, MHB said the heavy engineering segment will continue to face challenges in executing its ongoing projects within the originally budgeted margins due to the impact of price escalations of raw materials and global supply chain disruptions.
For the marine segment, the group sees competition among peers remaining stiff, given the presence of new LNG carrier-repair yards in China and other neighbouring countries.
“We will continue to explore opportunities in both domestic and international markets. With the novel offshore wind farm project awarded recently, the group will focus on pursuing more renewable energy projects as well as those in the decarbonisation space.
“In consideration of the global supply chain issues, we have taken steps to improve contracting strategies with clients where possible.
“Notwithstanding the major challenges in some projects, we remain committed to delivering all projects meeting clients’ requirements,” it added. – Bernama
