Bumi Armada Q2 turns red
Oil and gas company reports loss of RM585mil
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.