KUALA LUMPUR (March 14): Boustead Heavy Industries Corp Bhd (BHIC) has received a contract extension from the Ministry of Defence Malaysia (Mindef) worth RM3.5 million.

In a filing with Bursa Malaysia on Thursday, BHIC said its wholly-owned subsidiary BHIC Submarine Engineering Services Sdn Bhd (BSES) had on Feb 26 received the Letter of Award dated Feb 14 for the extension of the submarine facilities upkeep contract for the Royal Malaysian Navy.

The extension is for a contract period of 45 days from Jan 1 until Feb 14.

"A formal contract between the government of Malaysia and BSES will be finalised and executed at a later date," BHIC said.

"The contract will contribute positively to the earnings of the BHIC group for the financial year ending Dec 31, 2024," it added.

The contract was initially awarded to BSES in May 2023 at a contract value of RM40.26 million for a period of 12 months from Jan 1, 2023 until Dec 31, 2023.

Financially, BHIC's net loss ballooned in the fourth quarter of 2023 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 with RM26.48 million over the same period a year earlier.

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.

For the full year of 2023, 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 during the year.