Boustead Heavy positive it can turn around financial fortunes this year

PETALING JAYA: Boustead Heavy Industries Corp Bhd (BHIC) is positive that it can turn around its financial fortunes in 2019, noting it had an order book of RM4.3 billion as at March 31.

Its deputy executive chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said the group is confident of seeing a reversal in performance from the RM108.3 million net loss, and a lower revenue of RM169.1 million,  for the year ended Dec 31, 2018 (FY18).  “Last year, in the first three quarters we made a profit. In the last quarter, we had to conform to the accounting standard, and of course, the accounting standard dictates that whatever we spend we have to recognise.

“There was a lot of spending on the variation orders [for a shipbuilding project], so we had to take that into account. Right now, we are negotiating with the authorities to reduce additional variation costs,” he told reporters after the group’s annual general meeting yesterday. Ahmad Ramli said BHIC is looking to penetrate the regional market, as he believes the group is cost-competitive regionally, and that it cannot entirely depend on the government for work orders.

BHIC chief operating officer Ee Teck Chee said the group has earnings visibility up to 2023 based on its order book of RM4.3 billion as at March 31. He said 60% of the order book comprises contracts to build littoral combat ships (LCS) and littoral mission ships (LMS), and the balance 40% are maintenance, repair and overhaul (MRO) orders. Asked how the group will leverage on the Royal Malaysian Navy’s (RMN) 15-to-five transformation plan given the government’s concerns over high debts that it has, Ee pointed out the group is already manufacturing the LCS and LMS. “We have the design for the NGPV (new generation patrol vessel), and are building four LMS. We hope to continue with the 15-to-five programme,” he said.

He added that the group had received a letter of intent from the government for the integrated logistics support for the government’s LCS project, expected to be finalised in the next few months. “This is a good indication that for this year, we should see a better performance,” said Ee, adding that the group is poised to take over more jobs from the government. “We are poised to take more jobs from the government, including MRO, because existing ships need to be maintained. If the government wants to build new ships, [then] we have the expertise,” he said.

The 15-to-five plan was launched by the RMN to streamline the naval vessel categories from 15 to five. These five are submarines, LCS, LMS, NGPV and multirole support ships.

THE EDGE

24 April 2019