Malaysia Marine and Heavy Engineering Berhad reported its 2023 financial standing with revenue increasing to RM3.3 billion against RM1.65 billion recorded in the previous year, however the group saw its profit decline substantially from RM67 million in 2022 to a loss of RM484 million.
MMHE said the loss was due to the additional cost provisions resulted from revised schedule and price escalation impact on ongoing projects during the current year. In addition, the weakening of Malaysian Ringgit against United States Dollar had negatively impacted the hedging of receivables for a project.
For the fourth quarter, revenue of RM1,118.4 million an increased by RM694.4 million from revenue of RM424.0 million in the corresponding quarter mainly due to higher revenue from the Heavy Engineering segment. Despite the higher revenue, the Group recorded an operating profit of RM10.9 million, almost level with the operating profit of RM9.8 million in the corresponding quarter.
Revenue of RM323.9 million in the current year was RM13.0 million lower than the prior year revenue of RM336.9 million, mainly
due to lower dry-docking services for LNG carriers and other vessels during the year. Lower dry-docking activities were contributed
by the re-opening of China’s borders beginning 2023.
The segment reported an operating profit of RM22.5 million in the current year, 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.
Revenue of RM323.9 million in the current year was RM13.0 million lower than the prior year revenue of RM336.9 million, mainly
due to lower dry-docking services for LNG carriers and other vessels during the year. Lower dry-docking activities were contributed
by the re-opening of China’s borders beginning 2023.
The segment reported an operating profit of RM22.5 million in the current year, 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.
The Group posted higher revenue of RM1,118.4 million compared to preceding quarter’s revenue of RM638.5 million mainly due to
higher revenue from both Heavy Engineering and marine segment.
At the operating profit level, the Group recorded operating profit of RM10.9 million, compared to RM100.2 million operating loss in
Quarter 3, FY 2023 mainly due to the partial recognition of cost recovery claims negated by the additional cost provisions for an
ongoing project. In the previous quarter, the Group suffered losses due to additional cost provisions for ongoing Heavy Engineering
projects coupled with the weakening of Malaysian Ringgit against United States Dollar which had negatively impacted the hedging
of receivables for a project.
The oil market is anticipated to improve further in 2024, backed by forecast demand and high oil prices amidst limited supply from
continued production cuts by OPEC+. The likelihood of improvement is high should there be no further deterioration in the global
economic situation and ongoing geopolitical tensions. However, if the Red Sea crisis escalates to war, this could give rise to all
commodity prices. Until that happens, high oil prices would be favourable for oil majors to boost upstream capital spending for the
year. 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 its ongoing projects within the
original budgeted margins due to the impact of price escalations of raw materials and global supply chain disruptions. These
projects, awarded on a lump sum EPCIC basis by clients a few years ago, face ongoing efforts to recover from the inflationary and
schedule impacts. The Group will continue pursuing the recovery of these impacts from clients.
For the Marine segment, the Group expects competition among peers to remain stiff, given the presence of new LNGC-repair yards
in China and other neighbouring countries. Despite that, the Group is continuing with the efforts in securing more dry-docking
opportunities with major LNG players, as well as conversion projects, given the uptrending oil prices and stabilised oil and gas
market.
The Group will continue to explore opportunities in both domestic and international markets. With the novel offshore windfarm
project awarded recently, the Group will focus to pursue more renewable energy projects as well as those in the decarbonisation
space. In consideration of the global supply chain issues, the Group has taken steps to improve its contracting strategies with clients
where possible through alliance concept, reimbursable or cost-plus basis to mitigate those issues. Notwithstanding the major
challenges in some projects, the Group remains committed to delivering all projects meeting clients’ requirements
