Thursday , May 13 2021

Bumi Armada Q3 net loss of RM502.8m due to non-cash impairments – Business News

KUALA LUMPUR: International Offshore Energy Facilities and Services Provider Bumi Armada Bhd posted net losses of RM502.82m in the third quarter ended September 30, 2018 due to non-cash impairments totaling RM563.5mil.

In a statement to Bursa Malaysia on Friday, it would have made a net profit of RM75.2mil if not for non-cash impairment of RM41.4mil for floating production and production (FPO) and RM522.1mil for offshore marine services (OMS) businesses.

The non-cash impairments saw a net loss of RM502.82mil compared to 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% compared to earnings per share of 2.11 sen.

"Revenue contribution from 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 a lower contribution from the Armada Installer in the subsea construction segment. The offshore support vessels (OSV) segment saw an improvement in vessel use, 43% in Q3 2018 compared to 38% in Q2 2018.

Bumi Armada said the FPO business registered a weaker income of RM144.5mi compared with 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 a floating production storage & offloading (FPSO) conversion candidate.

The OMS business recorded a segmental loss of RM545.2mil in Q3 2018 mainly due 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 of performance across our fleet has been positive and is the result of its ongoing efforts on safety awareness and proactive measures across the organization.

"This has resulted in an increased operating profit of RM114.7 million for the quarter," he said.

"As for the FPO business, we have secured a six-year and three-month extension contract for the Armada TGT 1 FPSO in Vietnam, which is a 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 for a project that has been extremely challenging both in its operational complexity and the environment in North Sea.

"During the quarter, the group recognized a non-cash impairment of RM41.4mil in its FPO business, relating to the sale of Armada Ulysses VLCC," he said.

Harland said in the OSV segment, the group took a non-cash impairment charge of RM522.1mil over 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.

Harley said Bumi Armada continued 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 2019 will remain on optimizing our cost structure, strengthening our balance sheet, monetizing under-utilized assets and collecting and generating more cash flow," he said.

For the nine months, it posted a net loss of RM1.04bil compared to a net profit of RM288.43mil in the previous corresponding period. Its revenue rose to RM1.84bil from RM1.74bil.

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