The Malaysia-listed company, Malaysia Marine & Heavy Engineering, witnessed a significant drop in its shares after reporting a loss in the second quarter. This was primarily due to higher provisions impacting the company's financials.
Shares of Malaysia Marine & Heavy Engineering plummeted by up to 18% during the session and currently stand 17% lower at 0.48 ringgit. The company has faced year-to-date losses of 20%.
Malaysia Marine & Heavy Engineering revealed a net loss of MYR388.7 million ($83.8 million) for the quarter. This is in stark contrast to its net profit of MYR21.97 million during the same period last year. The company attributed this unfavorable outcome primarily to increased cost provisions for projects.
On a brighter note, quarterly revenue saw a significant surge from MYR400.63 million to MYR1.06 billion. This upward trend was driven by higher contributions from the heavy-engineering segment.
The company anticipates difficulties in executing its current works in the heavy-engineering segment as projected margins may be impacted by elevated raw-material prices and supply-chain disruptions on a global scale. Notably, the projects were initially awarded a few years ago based on a lump-sum engineering, procurement, construction, installation, and commissioning basis. However, the surge in raw-material prices and the complexity of procurement processes have the potential to affect project costs and timing.
Malaysia Marine & Heavy Engineering remains determined to counteract the inflationary pressures and challenges associated with project costs and schedules.
Furthermore, the reopening of China's borders is expected to contribute to intensified competition among shipyards, potentially impeding the company's marine segment.
While facing these challenges, Malaysia Marine & Heavy Engineering aims to strategize and navigate through the obstacles to safeguard its operations.