Bumi Armada posts net loss in second quarter on impairments

PETALING JAYA: Bumi Armada Bhd suffered a net loss of RM585.48 million during the second quarter ended June 30 compared with a net profit of RM116.59 million a year ago on impairment charges and provisions.

In a filing with Bursa Malaysia, the group said it recognised an impairment charge of RM477.2 million and RM1.7 million for the Armada Kraken FPSO and Armada Gema respectively during the quarter, as well as net allowances for impairment losses of RM117.4 million.

In a separate filing, the group explained that the impairment charge of RM477.2 million was the result of Bumi Armada, together with EnQuest Heather Limited, EnQuest ENS Limited and Nautical Petroleum Limited (Kraken charterers) waiving their respective rights from certain claims and events under a bareboat charter under an amended agreement.

As part of the mutual waivers, AKPL will pay US$15 million (about RM60 million) to the charterers. The sum will be fully paid by Dec 17.

Bumi Armada has estimated a negative financial impact of US$25 million on profit or loss from the amended agreement.

It said the signing of the amended agreement is expected to mitigate its long term financial exposure under the bareboat charter.

“Excluding the non-cash impairment charges, the group would have posted a net profit of RM10.8 million,” it said.

Revenue for the quarter fell 5.8% to RM654.04 million from RM694.42 million a year ago due to lower revenue in the offshore marine services segment, which reported a 41.8% decline in revenue due to low activity in the offshore support vessel (OSV) segment.

OSV fleet utilisation during the quarter remained flat at 38% due to soft demand while the subsea construction segment continued to produce stable contributions due to ongoing work in the Caspian Sea.

The floating production and operation segment’s revenue rose 32.3% to RM446.5 million during the quarter .

For the six months ended June 30, the group reported a net loss of RM537.06 million compared with a net profit of RM164.70 million while revenue rose 14.18% to RM1.25 billion from RM1.1 billion.