Photo by Zahid Izzani/The Edge

Net loss for the three months ended Dec 31, 2023 was RM256.72 million compared to RM26.48 million over the same period a year earlier, as BHIC booked an allowance for expected credit losses of RM261.4 million owed from Lumut Naval Shipyard Sdn Bhd, formerly Boustead Naval Shipyard Sdn Bhd.

KUALA LUMPUR (Feb 29): Boustead Heavy Industries Corporation Bhd (BHIC) said on Thursday its net loss ballooned in the fourth quarter from a year earlier mainly due to provisions for the long-delayed littoral combat ships (LCS) project.

Net loss for the three months ended Dec 31, 2023 was RM256.72 million compared to RM26.48 million over the same period a year earlier, BHIC said in an exchange filing. The company booked an allowance for expected credit losses of RM261.4 million owed from Lumut Naval Shipyard Sdn Bhd, or Lunas.

Revenue for the quarter, however, rose 28.9% year-on-year to RM49.69 million from RM38.56 million.

Looking ahead, BHIC said it is currently exploring opportunities in areas beyond its traditional businesses of marine, aerospace and weapons and combat systems.

Lunas, formerly Boustead Naval Shipyard Sdn Bhd, has been in the spotlight for years of delays and cost overruns in the proposed development of six LCS for the navy. The latest provision was based on the “ongoing negotiations with Lunas on the settlement of the amounts owed”, BHIC noted.

“Both interim in-service support (ISS) contracts for the Royal Malaysian Navy submarines and submarine facilities upkeep contracts are expected to contribute positively to the group’s earnings in FY2024,” the company said.

For the full year, BHIC’s net loss widened to RM263.88 million from RM19.92 million a year ago, while its revenue declined 10% to RM127.36 million from RM141.76 million, due to variations in the milestones achieved for submarine contracts. The company did not declare any dividend for FY2023.

Last year, BHIC proposed to undertake a partial debt settlement with three banks totalling RM183.26 million and the full settlement of its RM234 million debt with parent company Boustead Holdings Bhd.

“The approval by our shareholders of our debt settlement proposals in December 2023 was a milestone that put us on a strong footing to get back to the path of growth and value creation to our shareholders,” BHIC said.

At Thursday’s market close, the counter was unchanged at 49 sen, valuing the group at RM276.5 million.