Bumi Armada posts higher Q1 net profit as costs decline

However, Hong Leong Investment Bank Research has a Hold and TP of 35 sen, Maybank Investment Bank Research and UOB Kay Hian Malaysia Research a Sell and TP of 11 sen and 10 sen.

KUALA LUMPUR: Bumi Armada Bhd's net profit rose by 28.5% to RM62.21mil in the first quarter ended March 31, 2019 due to lower cost of sales, administrative expenses and lower finance costs.

The offshore energy facilities and services provider said on Monday its net profit rose from the RM48.42mil a year ago. Its revenue fell by 18.1% to RM491.61mil from RM600.34mil a year ago. Earnings per share were 1.06 sen compared with 0.83 sen.

The compay said floating production and offloading (FPO) business reported lower revenue of RM425.6mil due to lower revenue from Armada TGT 1 FPSO, with the vessel now in its extension agreement contract. 

The offshore marine services (OMS) business reported revenue of RM66mil which was lower than a year ago due to Armada Installer and Armada Constructor completing their contracts at the end of 2018. The offshore support vessels (OSV) segment was unchanged in Q1 2019, as fleet utilisation remained below 40%. 

“Offsetting the revenue decline were reductions in expense for cost of sales, selling and distribution cost, and administrative cost. In addition, the group had a stronger contribution from its joint venture and associates in Q1 2019, versus Q1 2018,” it said.

Bumi Armada executive director and CEO Gary Christenson said: “Since the close of Q1 2019 the refinancing of our corporate debt has now been completed and we will monetise under-utilised assets to accelerate debt reduction. 

“In addition the group announced a new  floating production storage and offloading project for ONGC’s Kakinada 98-2 oil field with our Indian joint venture company.

“We are looking to stabilise the financial performance of the group through various efficiency and performance improvement initiatives. 

“Our focus will be on improving our performance on Armada Kraken, selectively pursuing new FPO projects and strengthening the balance sheet to support growth going forward.”