SHAH ALAM: ISS contract to BDNC. Boustead Heavy Industries Corporation Bhd (BHIC) on June 16 announced its subsidiary company, Boustead DCNS Naval Corp Sdn Bhd (BDNC) was awarded a RM154.3mil contract from the Defence Ministry. BDNC — 60%-owned by BHIC’s unit BHIC Defence Technologies Sdn Bhd and 40%-owned by France’s Naval Group — received the letter of award for the In-Service Support for Prime Minister’s class submarines of the RMN.
The Bursa Malaysia announcement:
The Company wishes to announce that Boustead DCNS Naval Corporation Sdn. Bhd. (BDNC) had accepted a letter from the Ministry of Defence Malaysia (MINDEF) on 16 June 2020, awarding BDNC a contract for provision of In-Service Support for Prime Minister’s Class Submarines for the Royal Malaysian Navy (Contract). This Contract is for a period of one year starting 1 January 2020 at a contract value of RM154.3 million. A formal contract between MINDEF and BDNC will be signed at a later date.
BDNC is a joint venture company between BHIC Defence Technologies Sdn. Bhd. (60%), a wholly owned subsidiary of BHIC, and Naval Group (40%).
The Contract will contribute positively to BHIC Group’s current year earnings.
None of the directors or substantial shareholders of the Company, or persons connected with them, has any interest, direct or indirect, in the Contract.
The annnouncement came 11 days after BHIC announced that BDNC had been slapped with a claim liquidated damages from the Defence Ministry.
I am assuming that the contract was extended to allow for the support contract to continue as the ministry prepare the terms for a longer term contract, five years, which was supposed to be open to other bidders next year. The previous deputy Defence Minister had told Parliament last year that a closed request for bids was expected to be held in 2021.
On June 10, BHIC also reported that it had posted a net profit in the first quarter of 2020. From the Edge.
Boustead Heavy Industries Corp Bhd (BHIC) returned to the black in the first quarter ended March 31, 2020 (1QFY20), boosted by defence-related maintenance, repair and overhaul (MRO) activities.
The heavy engineering services firm posted a net profit of RM20.38 million for the quarter, compared to a net loss of RM4.3 million for 1QFY19, and a net loss of RM118.6 million for 4QFY19.
From the BHIC Bursa announcement with heading Future Prospects:
The global economy has come almost to a virtual standstill as countries impose lockdown and movement restrictions to check the spread of the Covid-19 virus. This has impacted many businesses and industries, including in Malaysia where a Movement Control Order was introduced on 18 March 2020 and has been extended several times. This has caused a sharp drop in consumption and production, impediments along supply chains and disruption in trade. They inevitably combine to send the economy into a tailspin, with a recession on the cards.
However, recently the construction of the remaining three Littoral Mission Ships (“LMS”) in China hasresumed post Covid-19. Both the LCS and LMS Programmes are ongoing at slower progress. The Associate and China Shipbuilding & Offshore International Company had declared Force Majeure due to Chinese government lockdown of Wuhan city and was agreed by the Malaysian Government during Covid-19. Although work has partially resumed, the milestones of the project will have to be reviewed given the delay caused by the lockdown.
The Group’s joint venture undertaking MRO works on helicopters is performing better and the Group is confident in securing contracts in relation to aviation from the Malaysian Government. The Group will continue its pursuit of new markets while looking out for opportunities presented by RMN’s 15to5 Transformation Programme as well as the Defence White Paper released by Ministry of Defence Malaysia. Our Business Development team will step up efforts to look for commercial deals to diversify our earnings base and non-Government businesses within and beyond our core businesses
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