PETALING JAYA: Boustead Heavy Industries Corp Bhd’s (BHIC) net profit multiplied almost 10 times to RM5.1 million for the second quarter ended June 30 (Q2 FY2023) from a net loss of RM517,000 in the same quarter last year.
The shipbuilder’s turnaround was achieved on the back of a 412.5% or RM26.4 million jump in revenue to RM32.8 million from RM6.4 million in the preceding quarter (Q1 FY2023), generated mainly from the achievement of its submarine contracts’ milestones.
For the six months ended June 30 (H1 FY2023), it suffered a net loss of RM1.45 million from a net profit of RM6 million in the same period last year while revenue dropped to RM39.16 million from RM67.33 million last year.
CEO Feroz Razi Ramli said the milestones relate to the award of submarine-related contracts by the defence ministry to its wholly-owned subsidiary BHIC Submarine Engineering Services Sdn Bhd, and helicopter maintenance, repair and overhaul (MRO) contract to its joint venture, BHIC AeroServices Sdn Bhd.
He said the award of the contracts reflects the government’s confidence in BHIC’s ability to undertake projects involving the nation’s strategic assets while contributing to safeguarding its defence and security.
In May this year, BHIC Submarine Engineering Services was awarded a contract for the interim in-service support for the navy’s “Prime Minister’s Class Submarines”. The navy has two Scorpene submarines, which are based at Sepanggar in Sabah.
The RM99.8 million contract will last until Feb 14, 2024 while a second contract is an extension to upkeep the navy’s submarine facilities worth RM40.2 million. This contract will run until Dec 31 this year.
Meanwhile, parent company Boustead Holdings Bhd (BHB) said BHIC’s Q2 FY2023 performance augurs well with the attainment of the goals set in the Armed Forces Fund Board’s (LTAT) 2023-2025 strategic plan, dubbed Mampan 25.
BHB owns a 65% stake in BHIC while LTAT, which recently took BHB private, holds another 8.16% direct stake in BHIC.
BHIC to undergo business restructuring
BHB executive chairman Nazim Abd Rahman said following the recent takeover of Boustead Naval Shipyard Sdn Bhd (BNS) by the government, BHIC will undergo a business restructuring to capitalise on its current facilities and core capabilities to remain competitive in the defence and security sectors, while venturing into new business prospects.
BHIC is divesting its 20.77% stake in BNS, the company overseeing the controversial littoral combat ship (LCS) project, to ministry of finance-owned entity Ocean Sunshine Bhd for a nominal fee of RM1.
This move is said to align with the government’s strategy to ensure the successful delivery of five naval ships valued at RM11.2 billion.
The LCS initiative faced heavy criticism in the past year when Parliament’s Public Accounts Committee revealed that despite the government disbursing RM6.08 billion to BNS, none of the six commissioned ships had been completed.
BHIC’s shares closed five sen or 9.8% higher at 54 sen, giving it a market capitalisation of RM139 million.