KUALA LUMPUR (Nov 25): Boustead Heavy Industries Corp Bhd (BHIC) posted a net profit of RM564,000 for its third quarter ended Sept 30, 2022 (3QFY2022), down 95% from 3QFY2021's RM11.78 million, as revenue dropped due to variations in milestones attained for the Royal Malaysian Navy's (RMN) submarine contracts.
Revenue fell 17% to RM35.9 million from RM43.3 million. Earnings per share shrank to 0.23 sen from 4.74 sen, its bourse filing showed.
The latest quarterly earnings indicate a return to profit for the group when compared with its immediate preceding quarter of 2QFY2022, when it posted a net loss of RM517,000 on a revenue of RM29.87 million, thanks to positive contributions from joint venture companies that were derived of higher supply of spare parts to the RMN and higher number of training hours conducted.
For the cumulative nine months ended Sept 30, 2022 (9MFY2022), the group posted a net profit of RM6.56 million, down 72% from 9MFY2021's RM23.17 million, as revenue dropped 6% to RM103.2 million from RM109.42 million due to lower contributions from submarine projects and other defence-related MRO projects.
Its cumulative earnings were also impacted by higher finance costs of RM13 million, compared with RM11.4 million previously, due to higher weighted average interest rate. It also accounted for negative contributions from joint venture companies of RM1.2 million — as opposed to a profit of RM979,000 previously — due to lower demand from customers and higher operating expenses.
In a statement, BHIC chief executive officer Sharifuddin Md Zaini Al-Manaf said the group's efforts to enhance efficiency and productivity throughout the group contributed to the positive results.
"We are fully committed to completing projects on time and at cost and to the satisfaction of our customers. At the same time, we will leverage on our strengths as one of the top defence contractors in Malaysia to win new projects and explore new businesses, especially in the commercial segment," he said.
Touching on the RM9 billion littoral combat ship (LCS) project, group managing director Datuk Seri Mohammed Shazalli Ramly said the proactiveness of the Malaysian government to complete it within the time frame stipulated augurs well for the group's prospects.
"Following bilateral meetings between the Malaysian and French governments and the project's main subcontractor Naval Group from France, all parties have expressed their support to complete the LCS," said Shazalli.
The LCS project, which was awarded through direct negotiations to BHIC's subsidiary Boustead Naval Shipyard Sdn Bhd in 2011 — when Umno president Datuk Seri Dr Ahmad Zahid Hamidi was the defence minister — came under scrutiny earlier after it was revealed that not one of the six ships contracted to be built had been completed despite the government having paid RM6.08 billion.
According to Navy Chief Admiral Tan Sri Mohd Reza Mohd Sany on Oct 29, the construction of the LCS was expected to resume early next year, after the completion of the mobilisation process at year end.
Former defence minister Datuk Seri Hishammuddin Hussein was reported as saying in August that the first of the six LCS ships should be ready no later than two years from then.
BHIC's share price closed two sen or 4.76% lower at 40 sen on Friday (Nov 25), bringing the group a market capitalisation of RM99.4 million.
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