Commenting on the results, chief executive officer Leon Harland said:
KUALA LUMPUR: International offshore energy facilities and services provider Bumi Armada Bhd
posted net losses of RM502.82mil in the third quarter ended Sept 30, 2018 due to non-cash impairments totaling RM563.5mil.
In a statement to Bursa Malaysia on Friday, it said it would have made a net profit of RM75.2mil if not for the non-cash impairments of RM41.4mil for the floating production and production (FPO) and RM522.1mil for the offshore marine services (OMS) businesses.
The non-cash impairments saw it post net loss of RM502.82mil compared with a net profit of RM123.73mil a year ago.
Bumi Armada's revenue fell by 8.3% to RM588.04mil from RM641.39mil a year ago. Loss per share was 8.56 sen compared with earnings per share of 2.11 sen.
“Revenue contribution from the FPO business in Q3, 2018 was RM405.7miln, a slight increase over the RM402.7mil recorded in Q3 2017 and a decline of 9.1% compared to the second quarter or Q2 2018,” it said.
The OMS revenue fell by 23.6% to RM182.3mil mainly due to lower contribution from the Armada Installer in the subsea construction segment. The offshore support vessels (OSV) segment saw an improvement in vessel utilisation, 43% in Q3 2018 as compared to 38% in Q2 2018.
Bumi Armada said the FPO business registered weaker income of RM144.5mi as compared to RM182.4mil a year ago due to a non-cash impairment charge of RM41.4mil.
This was taken against the sale of the Armada Ulysses, a very large crude carrier (VLCC) tanker, which was a vessel held as an floating production storage & offloading (FPSO) conversion candidate.
The OMS business registered a segmental loss of RM545.2mil in Q3 2018 due mainly to a non-cash impairment of RM522.1mil on selected OSV vessels.
On the Q3 results, its executive director and CEO Leon Harland said the availability performance across our fleet has been positive and is the result of its continuous efforts on safety awareness and proactive measures across the organisation.
“This has resulted in an increased operating profit of RM114.7 million for the quarter,” he said.
“As for the FPO business, we secured a six-year and three-month extension contract for the Armada TGT 1 FPSO in Vietnam, which is clear recognition of the capabilities of the unit and its strong operational track record.
“In Q3 2018 we also completed the final acceptance of the Armada Kraken FPSO on Sept 4. This is a positive result to a project that has been extremely challenging both in its operational complexity and the environment, in the North Sea.
“During the quarter, the group recognised a non-cash impairment of RM41.4mil in its FPO business, relating to the sale of the Armada Ulysses VLCC,” he said.
Harland said in the OSV segment, the group took a non-cash impairment charge of RM522.1mil against approximately 70% of the OSV fleet.
“Vessel charter rates remain weak and our OSV team has become more conservative over the segment’s outlook going forward.
“Contributions from the subsea construction segment in Q3 2018 weakened against Q2 2018 as the Armada Installer has completed this year’s work scope in the Caspian Sea.
“We continue to bid on new prospects for both the Armada Installer and the Armada Constructor for 2019 and beyond,” he said.
Harland said Bumi Armada was continuing its focus on strengthening its overall balance sheet.
“We are working with our lenders to put in place a refinancing of our US$500mil debt, of which approximately one-third was due in October 2018.
“We have made a partial repayment of US$120mil in October 2018 and are looking to refinance the balance of debt into a longer-term facility.
“Our primary focus for the rest of 2018 and into 2019 will remain on optimising our cost structure, strengthening our balance sheet, monetisation of under-utilised assets and collecting and generating more cash flow,” he said.
For the nine months, it posted net loss of RM1.04bil compared with net profit of RM288.43mil in the previous corresponding period. Its revenue rose to RM1.84bil from RM1.74bil.
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