KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd’s (MHB) net profit fell 65.4% to RM46.36 million for the third quarter ended Dec 31, 2011, from RM134.1 million a year earlier due to lower contribution from its Turkmenistan project.

Revenue fell 46% to RM716.2 million from RM1.32 billion in the previous corresponding period, while basic earnings per share was lower at 2.9 sen versus 8.8 sen. MHB’s operating profit fell 52.9% to RM52.9 million from RM112.4 million. The board recommended a final single tier dividend of 10 sen per share amounting to RM160 million.

In its filings with Bursa Malaysia, MHB said revenue from its largest income contributor, the engineering and construction division, fell to RM594.1 million from RM1.3 billion as no further revenue was recognised from an engineering, procurement, construction, installation and commissioning (EPCIC) project in Turkmenistan.  

“The contract was novated to a jointly controlled entity, MMHE-TPGM Sdn Bhd, with effect from Jan 1, 2011. The operating profit for engineering and construction underwent similar reduction from RM104.9 million to RM33.2 million,” it said.

MHB said profits of the EPCIC Turkmenistan Block 1, Phase 1 project is currently reflected in the share of profit of jointly controlled entities, and its new topsides and jackets project are still in preliminary stages to contribute significantly in the quarter.

The group added that its marine conversion and repair division posted higher revenue on contributions from two new contracts and more repair work from energy vessels. Operating profit for the division improved to RM16.1 million from RM2.3 million.

“The increase was mainly due to the increase in revenue although one of the secured conversion contracts has yet to contribute any operating profit as the works are still at a preliminary stage,” it said.

For the nine-month period, MHB’s net profit fell 36% to RM205.6 million from RM322.1 million previously. Revenue fell 37% to RM2.2 million from RM3.5 million while basic earnings per share was lower at 12.9 sen versus 23 sen.

MHB attributed the lower earnings to higher forex losses, lower contribution from its Turkmenistan project and reduced operating profit for its marine conversion and repair division.

Moving forward, MHB said its engineering and construction segment is expected to perform favourably through successful execution of its projects. “The performance for the marine repair and conversion segment is expected to remain satisfactory,” it added.

MHB has changed its financial year-end from March 31 to Dec 31. As such, its FY11 would end with only nine months from April 1 to Dec 31, 2011.

MHB closed 10 sen higher at RM5.51 yesterday with 2.8 million shares done.

This article appeared in The Edge Financial Daily, February 22, 2012.