Bumi Ar­mada Q2 turns red

Oil and gas com­pany re­ports loss of RM585mil

The Star Malaysia - StarBiz - - News - By GANESHWARAN KANA ganeshwaran@thes­tar.com.my

PETALING JAYA: Off­shore en­ergy fa­cil­i­ties and ser­vices provider Bumi Ar­mada Bhd fell into the red in the sec­ond quar­ter ended June 30, on the back of lower rev­enue and high im­pair­ments.

The group an­nounced in a Bursa Malaysia fil­ing that it has recorded a net loss of RM585.49mil, com­pared to a net profit of RM116.59mil a year ear­lier.

Dur­ing the quar­ter in re­view, Bumi Ar­mada recog­nised an im­pair­ment charge of RM477.2mil and RM1.7mil for the Ar­mada Kraken float­ing pro­duc­tion, stor­age and of­fload­ing (FPSO) unit and the group’s joint-ven­ture com­pany, PT Ar­mada Gema Nu­san­tara re­spec­tively.

Apart from these, the group also recorded a net al­lowance for im­pair­ment losses at RM117.4mil.

“Ex­clud­ing the non-cash im­par­ment charges, the group would have posted a net profit of RM10.8mil,” stated Bumi Ar­mada in the fil­ing.

Rev­enue-wise, the group saw a de­cline of 5.81% year-on-year (y-o-y) to RM654.04mil in the sec­ond quar­ter.

In the pre­vi­ous year’s cor­re­spond­ing quar­ter, Bumi Ar­mada recorded a rev­enue of RM694.42mil.

The group did not de­clare any div­i­dend for the quar­ter in re­viw. Loss per share in the sec­ond quar­ter were 9.97 sen.

Cu­mu­la­tively, for the first half of fi­nan­cial year 2018 (H1’18), the off­shore en­ergy facil- ities and ser­vices provider recorded a net loss of RM537.06mil, com­pared to an earn­ings of RM164.7mil in the same pe­riod a year ear­lier.

How­ever, the group’s top line in the six­month pe­riod im­proved by 14% y-o-y to RM1.25bil.

The stronger rev­enue in the first half was pri­mar­ily at­trib­uted by the com­mence­ment of op­er­a­tions of the Ar­mada Olombendo FPSO in Fe­bru­ary 2017 and Ar­mada Kraken FPSO in June 2017, whose rev­enue was recog­nised for a full pe­riod in H1’18.

Mov­ing for­ward, Bumi Ar­mada said its pri­mary fo­cus for the rest of 2018 will re­main on man­ag­ing its costs and strength- en­ing its bal­ance sheet, while pur­su­ing new op­por­tu­ni­ties.

“For the float­ing, pro­duc­tion and op­er­a­tion busi­ness, we are fo­cused on com­plet­ing the Kraken project as a pri­or­ity.

“The group will also look to pur­sue other suit­able new op­por­tu­ni­ties and po­ten­tial re-de­ploy­ment of avail­able as­sets.

“In our off­shore marine ser­vices busi­ness, the ac­tiv­ity of the off­shore sup­port ves­sel (OSV) seg­ment re­mains weak and we only ex­pect util­i­sa­tion of OSV fleet to im­prove when the oil com­pa­nies start to in­crease their ex­plo­ration drilling ac­tiv­i­ties.

“The group is re-as­sess­ing its strategy in re­spect of the OSV seg­ment.

“Our sub­sea con­struc­tion busi­ness will be busy over 2018 com­plet­ing work that has al­ready been se­cured in the Caspian Sea,” the com­pany said.

AmIn­vest­ment Bank Re­search has down­graded its rec­om­men­da­tion on Bumi Ar­mada to “hold”, and also low­ered the fair value to 60 sen per share from RM1.22.

The re­search house said that Bumi Ar­mada’s core net profit of RM107mil in H1’18 was below ex­pec­ta­tions, ac­count­ing for 24% of its and con­sen­sus’ earn­ings es­ti­mate for the cur­rent fi­nan­cial year of 2018 (FY18).

“We have cut Bumi Ar­mada’s FY18-20 earn­ings by 26%-29% on low­ered FPSO rev­enue as­sump­tion and mar­gins.

“The risk pro­file of the group re­mains el­e­vated given its short-term unse­cured debt of RM2­bil as at June 30 against the back­drop of im­pair­ment losses,” it said. se­lec­tively

Chal­leng­ing times: A Bumi Ar­mada ves­sel. The com­pany said its pri­mary fo­cus for the rest of 2018 will re­main on man­ag­ing costs and strength­en­ing its bal­ance sheet, while se­lec­tively pur­su­ing new op­por­tu­ni­ties.

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