KUALA LUMPUR: Bumi Armada Bhd
slipped into the red with net loss of RM291.5mil for the second quarter ended June 30, 2015, compared with a net profit of RM98.4mil a year ago due to impairment charges.
The offshore oilfield services provider said on Thursday it took a non-cash impairment charge of RM383.7mil, including an impairment of a non-core asset at a joint venture, during the quarter in review.
This resulted in a loss per share (LPS) of 4.97 sen, compared with an earnings per share (EPS) of 2.08 previously.
“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 T&I (Transport and Installation) and OSV (Offshore Support Vessel) business units, and a non-core asset held at a joint venture, in light of the weak outlook for the oil and gas sector,” Bumi Armada explained.
Excluding the impairment charges, Bumi Armada said it would have posted an adjusted net profit of RM84.8mil.
In Q2FY15, the group’s revenue fell 22.2% to RM459.1mil from RM590.1mil a year earlier.
“The decline in revenue was due primarily to lower utilisation of the vessels under the OSV and T&I business units,” the company explained.
On a cumulative basis, Bumi Armada’s net loss stood at RM219.5mil for the first half of 2015, compared with a net profit of RM163.2mil in the previous corresponding quarter.
Its loss per share was 3.74 sen, compared with an EPS of 3.45 sen previously, while its revenue fell 2.6% to RM1.03bil from RM1.06bil previously.
Despite the lacklustre performance, Bumi Armada continued to report strong net cash flows from operating activities of RM383.1mil, which represented an increase of 53% from a year ago.
“The group continues to generate positive net operating cash flows and core profit, driven by our FPSO (floating production, storage and offloading) business. The projects under conversion remain on track and we expect the group to continue to generate positive operating cash flows and EBITDA (earnings before interest, tax, depreciation and amortisation) going forward,” Bumi Armada executive director and acting chief executive officer Chan Chee Beng said.
For the first half of the year, Bumi Armada’s EBITDA rose 14.6% year-on-year to RM556.5mil.
“The group benefits from a strong firm orderbook of RM25.8bil, with potential extension options worth RM13.3bil, and this order-book will provide us with steady cash flows and earnings in the coming years.
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,” Chan said.
According to Chan, while the challenges and volatility in the group’s OSV and T&I businesses would continue for some time, the FPSO business was expected to remain robust on the back of 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,” Chan said.
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