SapKen sees tough times

  • Business
  • Wednesday, 25 Mar 2015

But it is confident of winning new businesses worldwide

KUALA LUMPUR: SapuraKencana Petroleum Bhd (SapKen), which saw its net profit tumble 61.7% to RM129.1mil in the fourth quarter ended Jan 31 against RM337.2mil previously, expects the oil and gas (O&G) industry to remain challenging.

“Going forward, we expect the market to remain challenging due to volatility in oil prices. However, we have operated and thrived in challenging markets. We are confident with our continued focus on operational effectiveness, cost optimisation and our aggressive drive to win new businesses worldwide,” president and group chief executive officer Tan Sri Shahril Shamsuddin said in a statement.

The company said the global O&G industry was experiencing difficult times and that the crude oil price had seen severe downward pressure in the second half of 2014 and remained volatile.

“The board believes that the environment for the industry remains challenging in the short to medium term and the group will see pressures in both revenues and margins,” SapKen cautioned.

Despite the challenges, SapKen was of the view that long-term outlook was positive and that the group had strong fundamentals to navigate this uncertain period.

Analysts said SapKen’s prospects remained bright despite the fluctuating oil price. They were not surprised with the fourth quarter results, citing seasonal weakness as the monsoon kicked in.

They noted that SapKen’s earnings visibility was excellent, given a solid and long-term order book.

In the fourth quarter ended Jan 31, SapKen saw its revenue jump 27% to RM2.39bil from RM1.88bil a year ago. Its earnings per share for the quarter stood at 2.16 sen compared with 5.63 sen previously.

For the financial year ended Jan 31, SapKen’s net profit surged 31.8% to RM1.43bil from RM1.08bil in the previous financial year. Its revenue increased by 18.6% to RM9.94bil from RM8.37bil.

SapKen said that in FY15, its drilling division secured 14 opportunities worldwide, comprising five new contracts and nine contract extensions – adding about RM5.1bil to the group’s order book.

It added that it took delivery of two new tender barges, expanded operations in West Africa and completed two contracts in Myanmar.

Its offshore construction and subsea services division took delivery of the Sapura Diamante and Sapura Topazio, marking the start of its operations in Brazil. Both the Brazilian pipelay support vessels (PLSV) were delivered ahead of schedule and are currently operating at more than 99% utilisation.

SapKen said it also took delivery of SK 1200 and SK 3500 which have successfully completed their maiden projects in China and Thailand.

Meanwhile, the company said its fabrication, hook-up and commissioning division had successfully completed key projects including the fabrication of TTM EVA platform, the commissioning and hook-up of the Kebabangan platform and the completion of brownfield works for Samarang Phase 2.

“This year saw the start of brownfield works in the Tapis enchanced oil recovery (EOR) project for ExxonMobil. In total, we won contracts to build 11 offshore structures this year totalling RM2.17bil in value,” it said.

It added that the most recent projects included the engineering, procurement, construction and commissioning of Baronia and Tukau WHP for Petronas Carigali and phase 3 brownfield work for Carigali-PTTEPI Operating Co Sdn Bhd.

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