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Petronas' oil rig-making unit stays in the red for fourth straight quarter

KUALA LUMPUR (NewsRise) - Malaysia Marine and Heavy Engineering, an oil rig builder controlled by state oil and gas company Petronas, suffered its fourth consecutive quarter of losses due to fewer and lower-valued projects.

Net loss for the three months ended September 30 totaled 4.5 million ringgit ($1.1 million) compared to net profit of 17.0 million ringgit a year earlier, the company said. Quarterly revenue fell nearly 24% year-on-year to 333.5 million ringgit from 436.3 million ringgit.

"The continued downturn of the oil and gas industry is expected to impact the group's business with significant offshore project cancellations and deferments," the company said. "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."

Malaysia Marine is among the casualties of the plunge in global oil prices that has prompted producers to scale back exploration activities and halt expansions. While oil has gained nearly 38% so far this year, prices remain far below its triple-digit peak in mid-2014.

Brent, the global benchmark for crude oil, was trading around $50.30 a barrel on Friday.

Malaysia's national oil and gas company Petroliam Nasional, or Petronas, owns 67% in Malaysia Marine via its listed shipping unit MISC.

For its first nine months, Malaysia Marine recorded a net loss of 14.6 million ringgit compared to a net profit of 71.0 million ringgit while revenue plummeted 49% to 887.7 million ringgit from 1.74 billion ringgit over the same period last year.

"Nevertheless, the group continues its efforts on cost management and resource optimization in line with the outlook of the industry," Malaysia Marine informed the stock exchange. "In addition, the group is also intensifying its effort in realizing the initiatives it had embarked upon to replenish its order book."

Analysts say 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," said Kenanga Investment Bank's analyst Sean Lim. "With its continuous decreasing yard utilization, we do not discount the possibility of impairment in the coming quarters."

Shares of Malaysia Marine fell 2.0% to 1.00 ringgit on Friday while the benchmark FTSE Bursa Malaysia KLCI was up 0. 1%.

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