KUALA LUMPUR (May 18): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB)’s net profit rose of 30% to RM3.54 million in the first quarter ended March 31, 2023(1QFY2023), from RM2.72 million a year ago.

Based on its filing to Bursa Malaysia, the group’s revenue saw a hike of 18.77% to RM496.23 million from RM417.78 million, on the back of higher revenue from their heavy engineering segment.

Its heavy engineering segment recorded a revenue of RM404.2 million this quarter, compared to RM358.4 million 1QFY2022, on account of higher revenue from ongoing projects.

Correspondingly, this segment faced an operating loss of RM8.7 million in the same quarter, owing to unabsorbed overheads.

Meanwhile, MHB’s marine segment saw a growth in its revenue — RM92.1 million, compared to RM59.4 million in the corresponding quarter — owing to higher dry-locking and repair activities.

The marine segment carried an operating profit of RM12.9 million, RM9.2 million higher compared to an operating profit of RM3.7 million in 1QFY2022, attributed to higher revenue and improved profit margins.

On prospects, the group said that the re-opening of China’s economy, coupled with Opec+'s decision to cut oil production, is expected to support strong oil prices for the year, which would most likely drive oil majors to ramp-up capital expenditure spending.

“In addition, the rapid growth of renewable energy and decarbonisation efforts driving global energy transition could present the group with business opportunities.

Notwithstanding this, the group remains cautiously optimistic on the outlook for the heavy engineering segment, in view of the growing risks of global recession and geopolitical tensions which could slow down business prospects.

The group expects its marine business to remain challenging, mainly due to stiff competition from Chinese shipyards amid the reopening of China’s borders.” MHB added.

Lastly, the group commented that dry-docking opportunities are becoming limited, as older LNG carriers decommission from service due to their inability to comply with the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) requirements imposed by the International Maritime Organisation (IMO).

The group said that they will continue to prioritise on improving project execution and successful delivery of current projects via operational and cost efficiency, alongside capturing domestic and international market opportunities.