Malaysia Marine and Heavy Engineering reported a group revenue of RM638.5 million for Q3 which was RM229.2 million higher compared to the corresponding quarter due to higher revenue from the Heavy Engineering segment. However, the group recorded an operating loss of RM100.2 million against an operating profit of RM19.1 million in the corresponding quarter mainly due to additional cost provisions for ongoing Heavy Engineering projects.
The loss was also attributed to the weakening of the Malaysian Ringgit against the United States Dollar had impacted the hedging of receivables for a project.
For the 3 quarters, the group posted revenue of RM2.19 billion, RM963.4 million higher than the prior period’s revenue of RM1.22 billion, contributed by a significant increase in revenue from the Heavy Engineering segment. Notwithstanding the increase in revenue, the Group reported an operating loss of RM478.6 million in the current period against an operating profit of RM51.1 million in the prior period as the current period was impacted by additional cost provisions recognised for
ongoing Heavy Engineering projects.
The recent Middle East conflict together with OPEC+ continued commitment towards supply cuts could further tighten global oil supply and lead to higher oil prices amidst growing global demand. This will likely increase CAPEX spending beyond the prepandemic level. In addition, the increasing significance of environmental, social, and governance (ESG) will create multiple business opportunities for the Group in the renewable energy space.
On project execution, the Heavy Engineering segment continues to face challenges in executing some of its ongoing projects within the originally budgeted margins due to the impact of raw material price escalations and global supply chain disruption. These projects were awarded on a lump sum EPCIC basis by clients a few years ago. The Group will continue to pursue the recovery of these inflationary and schedule impacts from clients.
