Bumi Armada swings into the red in Q2

> Due to a non-cash impairment charge of RM383.7 million

PETALING JAYA: International offshore oilfield services provider Bumi Armada Bhd incurred net losses of RM291.53 million in the second quarter ended June 31, 2015 compared with a net profit of RM98.37 million as it took a non-cash impairment charge of RM383.7 million that included an impairment of a noncore asset at a joint venture.

The group said excluding the impairment charge, it would have posted an adjusted net profit of RM84.8 million.

“The impairment charge was made pursuant to MFRS 136 ‘Impairment of Assets’, and relates mainly to the write down of the carrying value of certain vessels in the Transport and Installation (T&I) and Offshore Support Vessel (OSV) business units, and a non-core asset held at a joint venture, in light of the weak outlook for the oil and gas sector. In addition, the charge includes a write down of the group’s available-for-sale financial assets,” it told the stock exchange yesterday.

Revenue fell 22.2% to RM459.1 million for the quarter from RM590.08 million a year ago due primarily to lower utilisation of vessels under the OSV and T&I business units.

For its first six months of 2015, it posted a net loss of RM219.48 million from RM163.15 million, while revenue was 2.6% lower at RM1.03 billion.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to RM556.5 million for 1H 2015, a 14.6% increase.

The strong net operating cash flows and EBITDA increase were driven mainly by the Floating Production Storage Offloading (FPSO) business unit.

Commenting on the financial results, executive director Chan Chee Beng said, “The group continues to generate positive net operating cash flows and core profit, driven by our FSPO business.

“The projects under conversion remain on track and we expect the group to continue to generate positive operating cash flows and EBITDA going forward.”

Bumi Armada said its order book stands at RM25.8 billion, with potential extension options worth RM13.3 billion, and will provide steady cash flows and earnings in the coming years.

Bumi Armada said the low oil price continues to dampen sentiment and activities in the offshore oil and gas services sector, and the market is likely to be challenging through 2016.

“We are actively monitoring the performance of all business units, and will focus on further improving the productivity and efficiency of the group, including additional cost reduction measures, as may be necessary.

“While the challenges and volatility in the OSV and T&I businesses will continue for some time, the FPSO business remains robust on the back of our long-term firm contracts and the on-going conversions. Our new FPSO vessels will start to come on-stream in 2016 and are expected to deliver the next round of strong growth for the group,” it said.