Friday 29 Mar 2024
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KUALA LUMPUR (Aug 26): Bumi Armada Bhd announced net loss of RM518.32 million or 8.84 sen per share in the second quarter ended June 30, 2016 (2QFY16) — the worst ever quarterly loss so far, since the group was listed on Bursa Malaysia in July 2011.

The group’s earnings was dragged down by massive non-cash impairment charges of RM575.5 million. Bumi Armada disclosed that the significant portion of this non-cash impairment relates to the Armada Claire floating production, storage and offloading (FPSO).

In comparison, the group posted a net loss of RM291.53 million or 4.97 sen per share in the previous corresponding quarter.

Its quarterly revenue was down 12.2% to RM402.87 million, from RM459.08 million a year earlier, due to a 28% fall in the contribution from FPSO and floating gas solution (FGS) on the back of the loss of revenue from Armada Claire during 2QFY16, lower conversion activities as new projects near completion prior to sail away, and lower contribution from Armada Perkasa.

For the cumulative six months ended June 30(1HFY16), it sank deeper into red with RM494.89 million or 8.44 sen per share, versus RM219.48 million or 3.74 sen per share in 1HFY15. Cumulative revenue declined 19.2% to RM833.64 million, from RM1.03 billion.

Commenting on the earnings performance, Bumi Armada chief executive officer Leon Harland said the current climate of relatively lower oil prices continues to challenge the industry and the group has also been impacted by the loss of earnings from Armada Claire, challenges to get regular payments from its FPSO clients in Nigeria, and continued weak demand for offshore supply vessel services.

"In addition, we have taken non-cash impairments, predominantly on the Armada Claire, which pushed the results to a net loss," he added.

This non-cash impairment, he said, does not in any way change the group's position that the termination of the contract was unlawful, and it will continue to pursue its claim for damages for this unlawful termination.

"We believe that the underlying fundamentals of the group remain positive. We are well advanced in the completion of our four new FPSO/FGS projects. Once operational, these projects will provide a step-change in the group's financial results from 2017 onwards," he shared.

In the OSV business, Leon said the division is most exposed to reduced exploration and development activities by oil companies, and the chartered rates remain weak.

"Notwithstanding this, we have managed to slightly increase the utilisation of the fleet in 2QFY16, and we continue to focus on keeping the business as cost efficient as possible, and operating cash flow positive. We do not however, expect to see a major improvement in the OSV segment over the short-term," he said in a separate statement.

On FPSO operations, Leon said the group maintained an average uptime of over 99% for operating units, and have achieved some significant safety milestones, including three years of continued operations, without a lost time incident on the Armada Perdana during 2QFY16.

"Meanwhile, we remain focused on bringing our new major projects on stream and converting our backlog of RM21.9 billion of firm FPSO and FGS contracts, into day-to-day income," he added.

The stock was unchanged at 77 sen today, for a market value of RM4.46 billion.

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