Malaysia’s leading offshore and marine contractor MMHE is back in the black for the first nine months of 2022, reversing the losses of the comparable period of the previous year.

Contractor Malaysia Marine and Heavy Engineering posted a pre-tax profit of 40.4 million ringgit (US$8.79 million) on revenues of 1.2 billion ringgit for the nine months ended 30 September, with the heavy engineering segment boosted revenues year-on-year from 863.5 million ringgit to 988.4 million ringgit. This segment posted an operating profit of 5.5 million ringgit versus a 118.6 million ringgit loss in the first nine months of last year, when additional cost provisions for a current job had taken their toll.

However, MMHE cautioned that it cannot rest on its laurels despite the expected continuing steady investment levels by oil majors in years to come.

“Oil prices are expected to remain strong following Opec+’s decision to cut oil production to stabilise the oil market. The Russian invasion of Ukraine has also supported stronger oil prices. As such, capital spending by oil majors is expected to remain steady in the medium to long term. Growth in the renewable energy space also represents opportunities for us,” said MMHE chief executive Pandai Othman.

“However, prolonged global supply chain disruptions and rising production costs could still adversely impact heavy engineering business prospects. Hence, we remain cautiously optimistic on the outlook for the heavy engineering segment for the remainder of the year."

Key Malaysian projects in MMHE’s yard during the first nine months of the year included the engineering, procurement, construction, installation and commissioning (EPCIC) scope for Petronas’ Kasawari project, the EPCIC scope for the SapuraOMV-operated Jerun field development and the front-end engineering and design work for the Kasawari carbon capture and storage project (Kasawari phase two).

MMHE’s marine segment also boosted its revenues in the first nine months of this year – up from 171.8 million ringgit to 239.3 million ringgit, mainly due to higher dry-docking activities since Malaysia on 1 April reopened its international borders after the worst of the Covid-19 pandemic.

The marine segment turned around a 31.7 million ringgit operating loss in the first nine months of 2021 to a 39.6 million ringgit operating profit this year as revenues increased and some “doubtful debts” were recovered.

For the nine months ended 30 September 2022, the marine segment completed the repair and maintenance of 72 vessels, including the repair of eight liquefied natural gas carriers. MMHE’s total assets and total equity at that date were 3.4 billion ringgit and 1.8 billion ringgit, respectively.

Challenging outlook for marine sector

Pandai noted that reopening Malaysia’s borders has facilitated entry of technical specialists into the yard which had positively impacted its marine operations. Even so, he admitted that MMHE expects the marine business to remain challenging.

“High global gas prices and robust LNG demand from the Far East is expected to persist in view of the upcoming winter. As this will lead to growth in LNG trade, more vessel owners are anticipated to defer dry-docking and thus create stiffer competition amongst shipyards for the limited dry-docking opportunities,” he said.

“We aim to replenish our order book by capturing opportunities in both local and international markets including in the renewable energy sector. We continue to prioritise effective cost management and improving project execution and delivery through prudent investment in technology, people, processes, systems, digitalisation and automation,” added Pandai.

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