KUALA LUMPUR (Aug 16): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) registered a net loss of RM388.7 million for the second quarter ended June 30, 2023 (2QFY2023), versus a net profit of RM21.97 million a year earlier, dragged by the group’s additional cost provisions for ongoing projects.

MHB, which is controlled by Petroliam Nasional Bhd (Petronas), however, saw its revenue jump over two times to RM1.06 billion from RM400.63 million a year ago, mainly due to higher revenue from the heavy engineering segment.

The group posted a loss per share of 24.30 sen, against earnings per share of 1.40 sen previously, according to a bourse filing on Wednesday (Aug 16).

The heavy engineering segment recorded a revenue of RM990.9 million, from RM309.9 million for the previous corresponding quarter, driven by higher revenue from ongoing projects.

For the cumulative first six months ended June 30, 2023, the group posted a net loss of RM385.16 million, compared to a net profit of RM24.69 million a year before, while revenue increased 89.7% to RM1.55 billion from RM818.41 million.

On its prospects, MHB said that the heavy engineering segment will continue to face challenges in executing ongoing projects within the originally budgeted margins, due to the impact of raw material price escalations and global supply chain disruptions.

“These projects were awarded on a lump sum EPCIC (engineering, procurement, construction, installation and commissioning) basis by clients a few years ago. The group will continue to pursue the recovery of these inflationary and schedule impacts from clients,” it said.

Meanwhile, demand for dry-docking activities is expected to increase, as vessel owners prepare for a rise in seaborne trade requirements for the remainder of the year.

“Nevertheless, stiffer competition among shipyards is expected to continue to impact marine business operations since the reopening of China's borders. As such, the group anticipates the marine segment to remain challenging,” it noted.

The group said that it will continue to explore opportunities in both domestic and international markets, with increased emphasis on decarbonisation and renewable energy.

“The group is also looking into ways to improve its contracting strategies with clients through the alliance concept or on a cost-plus basis, where possible, to mitigate the risks of global inflation for future projects,” it added.

At Wednesday's noon break, shares in MHB closed half a sen or 0.87% higher at 58 sen, valuing the group at RM928 million.