The most striking figure is the revenue, which surged by an impressive 133% to RM44.53 million from RM19.15 million in the same period last year. This significant increase is primarily attributed to positive variations in the milestones achieved for submarine contracts.

Equally encouraging is the reduction in losses. The Loss Before Taxation (LBT) narrowed by 28%, decreasing from RM6.57 million to RM4.76 million. Similarly, the net loss for the period saw a 22% improvement, reducing from RM6.67 million to RM5.20 million. This positive trend is also reflected in the basic loss per share, which improved from (2.66) sen to (2.07) sen.

The Group also reported a negative Earnings Before Interest, Taxation, Depreciation, and Amortisation (EBITDA) of RM3.22 million, which is a 32% reduction from the negative EBITDA of RM4.73 million in the corresponding quarter of the previous financial year. This indicates improved operational efficiency, even if still below profitability.

Finance costs also decreased to RM181,000 from RM298,000 last year, a positive development driven by lower debt servicing costs following principal repayments in 2024. However, the Group’s losses were impacted by a higher negative contribution from joint venture companies, which stood at RM1.2 million compared to a loss of RM1.1 million in the prior year, primarily due to lower customer demand.

On a quarter-on-quarter basis, BHIC’s revenue saw a slight decrease of 2% compared to the immediate preceding quarter (Q4 2024), mainly due to lower maintenance, repair, and overhaul (MRO) activities in submarine contracts. This sequential decline in revenue, combined with a shift from profit to loss, indicates some volatility in operational performance.

The Group transitioned from a profit before taxation of RM1.74 million in Q4 2024 to a loss before taxation of RM4.76 million in Q1 2025. Similarly, net profit turned into a net loss. This significant swing was primarily due to a negative EBITDA of RM3.22 million in Q1 2025, a sharp reversal from the RM9.13 million positive EBITDA in Q4 2024. This change was largely influenced by lower volume of maintenance works from joint venture companies.

Taxation provision also decreased to RM437,000 in Q1 2025 from RM719,000 in Q4 2024, reflecting lower taxable profits from submarine contracts.

Total assets increased, primarily driven by a significant rise in receivables by RM60.0 million, reflecting increased billings to customers. Payables also increased by RM17.1 million, mainly due to higher payments to suppliers related to submarine contracts. Property, plant, and equipment (PPE) saw a modest increase from RM4.6 million to RM5.0 million, attributed to new acquisitions of computers and motor vehicles.

Cash and bank balances, however, decreased to RM96.8 million from RM131.3 million, mainly due to higher payments to suppliers, administrative expenses, and principal repayments on banking facilities. On a positive note, total borrowings decreased to RM3.68 million from RM4.15 million, driven by repayments of revolving credits and term loan facilities. The weighted average interest rate on borrowings also slightly decreased to 6.17% per annum.

• Operating Activities: Net cash outflow increased to RM32.7 million from RM29.3 million, mainly due to higher payments to suppliers.
• Investing Activities: Net cash outflow improved to RM235,000 from RM663,000, primarily due to purchases of PPE and motor vehicles being partially offset by interest income received.
• Financing Activities: Net cash outflow decreased to RM1.6 million from RM2.6 million, mainly due to lower principal repayments of borrowings.

BHIC remains optimistic about its future, with revenue growth expected to be sustained by the ongoing Submarine In-Service Support (ISS) 2 for the Royal Malaysian Navy (RMN). Additionally, the In-Service Support for the Royal Malaysian Air Force’s EC725 helicopters and the supply, maintenance, and training contracts for the RMN’s Bofors 40MM L70 gun are all anticipated to contribute positively to earnings in FY2025.

The company is leveraging its strengthened financial position, following debt restructuring and the monetization of unprofitable assets, to secure new contracts. This strategy aligns with the Malaysian Government’s continued commitment to national defense and security. Furthermore, BHIC is actively diversifying its earnings base by expanding into the commercial segment, aiming to build resilience and position the Group for sustainable long-term growth in an evolving market landscape.

Despite the positive outlook, BHIC faces several challenges that warrant attention:

• Contingent Liabilities: The company continues to deal with significant Liquidated Ascertained Damages (LAD) claims. As of 31 March 2025, the remaining LAD for the Refit Contract is RM14.5 million, and for the Extended In-Service Support (EISS) Contract, it stands at RM37.9 million. While BHIC has made a total provision of RM54.0 million for these claims and plans to appeal to MINDEF, this remains a notable contingent liability.
• Joint Venture Performance: The higher negative contribution from joint venture companies, due to lower demand and maintenance works, is a drag on the Group’s overall profitability. This highlights the need for improved performance or strategic adjustments within its JV portfolio.
• Sustained Losses: Despite a reduction in losses, BHIC is still operating at a net loss. The path to consistent profitability will require sustained efforts in cost management, operational efficiency, and successful contract execution.
• Cash Flow from Operations: The increased net cash outflow from operating activities indicates that the company is still consuming cash from its core operations, primarily due to higher payments to suppliers. Improving operational cash generation will be crucial for long-term financial stability.