Friday, 19 May 2017

Provisions and MSS payments hurt BHIC earnings

Saturday, 14 May 2016
The Star Online

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) posted a net loss RM19.04mil for its first quarter ended March 31 from a net profit of RM8.4mil a year ago due to shipbuilding project provisions and mutual separation scheme (MSS) payment.
The quarter’s revenue marginally increased to RM62.9mil from RM61.09mil in the same corresponding quarter last year.
Revenue from defence-related maintenance, repair and overhaul (MRO) activities contributed to the Group’s revenue in the current quarter.
“The associates posted higher losses of RM10.8mil in the current quarter arising primarily from provision for variation orders for a shipbuilding project and payment made under the mutual separation scheme. The challenging operating environment arising from the global economic downturn, low oil price and weak ringgit looks set to persist in the near future.
“Nevertheless, we take a positive outlook of the group’s performance in subsequent quarters as we continue with our transformational initiatives, operational improvement and rationalisation exercise,” said BHIC executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor in a statement yesterday.
He added these were expected to result in an improved financial performance moving forward.

before

Wednesday, 9 November 2016 | MYT 11:23 PM

BHIC’s Q3 earnings almost quadruple due to right-sizing measures

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd’s (BHIC) earnings almost quadrupled to RM14.88mil in the third quarter ended Sept 30 partly due to an internal reorganisation exercise that included hiving off its loss-making chartering segment.

In a filing with Bursa Malaysia, it said profit from discontinued operation was RM2.4mil versus a loss of RM6.79mil a year earlier.

“Under discontinued operation, the chartering segment posted a higher profit of RM2.4mil due to over accrual of operating expenses pursuant to the reconciliation of expenses with the former ship manager,” said the subsidiary of conglomerate Boustead Holdings Bhd

Prior to the disposal of three chemical tankers in May, the chartering segment had incurred losses of RM6.84mil during the year owing to higher direct costs incurred by the chemical tankers under the previous spot charter arrangement and loss on disposal of the tankers.

“However, the losses were cushioned by the reversal of accrual of operating expenses such as crew wages and lubricant oils pursuant to the reconciliation of expenses,” BHIC said.

BHIC achieved its 277.5% jump in earnings on the back of an 11.1% increase in revenue to RM64.31mi.

For the nine-month cumulative period, the company’s earnings fell slightly to RM21.1mil from RM21.52mil previously although revenue was up by 0.3% to RM197.0mil.

BHIC said in a press statement that the heavy engineering segment contributed positively to the group mainly via defence-related maintenance, repair and overhaul (MRO) projects.

The joint venture (JV) companies involved in the submarine project as well as supply and delivery of guns also posted improved profits in the current quarter.  

BHIC executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said: “BHIC’s performance for the third quarter of the year is in line with our expectation of positive results amidst a challenging operating environment, arising from the group’s on-going transformation initiative to tighten operational efficiencies coupled with a strong focus on our core businesses and competencies,

“Specific right-sizing initiatives, based on the group’s established performance appraisal processes are currently in progress as part of our efforts to enhance and increase productivity at all levels.”

Going forward, BHIC is optimistic on its outlook given recent developments, which include the receipt of a non-binding letter of intent dated Oct 26 from the Defence Ministry for the supply of four littoral mission ships for the Malaysian Navy.


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