KUALA LUMPUR: A Petronas subsidiary involved in the construction of oil rigs for offshore exploration and production has seen revenue and profits drop considerably in the past year.
Malaysia Marine and Heavy Engineering, in which Petronas has a 67 per cent stake through MISC Bhd, suffered its fourth consecutive quarter of losses due to fewer and lower-valued projects, the Nikkei Asian Review reported last Friday.
Announcing its third quarter results for the year, Malaysia Marine reported its quarterly revenue fell nearly 24 per cent year-on-year to RM333.5 million from RM436.3 million. As a result, it recorded a net loss for the three months ending Sept 30 at RM4.5 million, compared with the net profit of RM17 million it made a year earlier, the company said.
“The continued downturn of the oil and gas industry is expected to impact the group’s business with significant offshore project cancellations and deferments. “This is expected to result in further decline in asset utilization, currently being assessed for impairment which will significantly affect the current year financial result,” the company said in a statement, according to the report.
In the first nine months of the year, Malaysia Marine recorded a net loss of RM14.6 million compared with the net profit of RM71 million it made for the corresponding period last year. This was due to revenue dropping by almost half to RM887.7 million from RM1.74 billion last year.
Malaysia Marine is just one more in a list of casualties suffering from the effects of the plunge in global oil prices over the past two years. Major oil producers have been forced to scale back on their exploration activities and halt expansion plans. Though the price of crude oil has gained nearly 38 per cent so far this year, prices remain far below its triple-digit peak in mid-2014.
As of last Friday, the global benchmark for crude oil, Brent Crude, was trading at around US$50.30 a barrel. The report quoted analysts as saying that the results came in below market expectations and flagged risk of lower margins amid depleting orders that the company has struggled to replenish. “This is worrying, given that it provides minimal earnings visibility.
“With its continuous decreasing yard utilisation, we do not discount the possibility of impairment in the coming quarters,” Kenanga Investment Bank’s analyst Sean Lim told Nikkei. Friday’s closing price for Malaysia Marine fell 2.0 per cent to RM1.00 in Bursa Malaysia, which was a reverse on the trend of the market which was up by 0.1 per cent.
