MALAYSIA Marine and Heavy Engineering Holdings Bhd (MMHE) posted a wider net loss in its latest quarterly filing, citing the collapse in demand for oil during the Covid-19 pandemic.
MMHE recorded a net loss of RM397 mil for the second quarter ended June 30 (2Q20) compared to a net loss of RM9.5 mil for the same quarter last year.
“This is attributable to the collapse in demand for oil and energy owing to the Covid-19 pandemic, resulting in most oil and gas companies deferring their upstream projects and cutting their capital spend,” MMHE said in its Bursa filing.
The group also registered a wider drop in revenue of 43.8% from RM276.4 mil last year to RM155.3 mil this year.
Sales dropped on the back of lower contributions from its core businesses – heavy engineering and marine.
Covid-19, the group said, restricted activities such as its yard operations which began operating since April as the country was under the movement control order (MCO).
Further, while oil prices have rebounded modestly on further OPEC+ production cuts, MHHE has maintained a cautious outlook.
“The group expects the oil market revival to be slow and gradual, with oil demand not expected to reach pre-pandemic levels for the foreseeable future,” MMHE said.
Postponement was also expected of upstream projects as oil majors seek to cut capital spending, MMHE said, which might impact securing new orders for the remainder of the year.
Adding to the list of uncertainties include competition from China and Singapore as well as a slump in demand for liquefied natural gas (LNG).
“In line with the current challenging industry landscape and outlook, the group continues to focus on cost management to optimise operating costs. The group is also prioritising execution and safe delivery of ongoing projects,” MMHE said, adding that it was strengthening efforts to replenish its order book as well.
At 5pm, MMHE’s shares were last done at 38 sen, down 1.5 sen, with 4.4 million shares traded. – July 23, 2020
