Sapura Energy returns to profit in first quarter

PETALING JAYA: Sapura Energy Bhd, which announced a plan to cut 20% of its workforce last week, has returned to profitability in the first quarter ended April 30.

In a filing with Bursa Malaysia yesterday, the oil and gas (O&G) service provider posted a net profit of Rm14.2mil for the first quarter compared to a loss Rm109.1mil a year earlier.

This was despite the group posting a 17% drop in revenue to Rm1.36bil during the quarter from Rm1.63bil previously.

Sapura Energy attributed the improvement in its bottomline to lower financing costs and better profit margins.

Despite the lower oil price environment, which is expected to continue, the group said it is optimistic that it would be able to ride through the storm.

It expects the challenging environment to remain in the short to medium term.

“Sapura Energy is optimistic that it is capable of withstanding current uncertainties and it is well-positioned to capture opportunities as the market recovers,” it said.

It pointed out that the positive results for the quarter were signs of the early progress in the group’s plans to achieve profitability, as it remains firmly on track to turnaround the company.

“In mid financial year 2020, Sapura Energy began executing a comprehensive plan to ensure lean and efficient operations, which resulted in enhanced productivity for the group.

“As part of the group’s planned capital management programme, a refinancing exercise is currently underway and is expected to be completed by the fourth quarter of this financial year,” it said.

Last week, Sapura Energy announced that it will lay off 800 full-time staff, which is about 20% of its workforce, as part of its measures to mitigate the impact of coronavirus (Covid-19) pandemic and low oil price environment.

Its chief executive officer Tan Sri Shahril Shamsuddin said it was necessary to rightsize the organisation based on a focused business strategy, given the cyclical nature of the O&G industry.

Earlier, Sapura Energy said its management team took a 50% pay cut while those earning less than RM10,000 were shielded from the measure.

Yesterday, shares of Sapura Energy closed lower at nine sen apiece.

The group’s order book stood at Rm14bil with Rm800mil new contract wins to-date.

For financial year ended Jan 31, 2020, Sapura Energy recorded a net loss of Rm4.56bil compared with a net profit of Rm207.55mil in the previous corresponding period, while revenue grew to Rm6.45bil compared with Rm4.57bil a year earlier.