KUALA LUMPUR (March 28): Sapura Energy Bhd saw its net loss widen to RM2.29 billion or 38.44 sen per share in the fourth quarter ended Jan 31, 2018 (4QFY18), from RM172.32 million or 2.89 sen per share mainly on the provision for impairment on property, plant and equipment of RM2.13 billion.
The company attributed the lower earnings to lower revenue from engineering and construction and drilling business segments as well as lower share of profit from associates and joint ventures, said the company in a filing to Bursa Malaysia today.
Its quarterly revenue was also down at RM1.19 billion, versus RM1.81 billion in 4QFY17.
For the full financial year ended Jan 31, 2018 (FY18), it reported a net loss of RM2.5 billion or 42.1 sen per share, compared to a net profit of RM208.32 million or 3.5 sen per share last year. Its revenue stood at RM5.89 billion, 22.95% lower than RM7.65 billion in FY17.
Looking forward, Sapura Energy said the board is optimistic that the gradual recovery in the industry will improve the medium- to long-term prospects for the group.
"The industry has seen a gradual recovery from the low levels of activity experienced in the last three years as reflected in the higher crude oil prices. Consequently, our services segment has witnessed increased levels of bidding and contracting activities globally," said the group.
Sapura Energy noted that the group continues to optimise costs which include impairing assets, in particular in the drilling segment, which it believes will take a longer period of recovery.
In the last two months, the group has secured RM2.7 billion of new orders in the services segment, which would contribute to revenues for FY19, said the company.
"For the exploration and production (E&P) segment, with completion of the SK310 B15 development, the group is currently focused on the potential development of SK408 field, which will further enhance the value and long-term earnings visibility of the business," said Sapura Energy.
"The group remains focused on maintaining strong operational performance and replenishing the orderbook by strengthening its position in existing markets and embedding ourselves into new ones to enlarge the bid opportunities, thus enhancing value for our stakeholders," said the company.
Meanwhile, a source familiar with Sapura Energy said the market has been recovering, and the company has increased its bidding by over 100% compared to a year ago and is also expecting to secure more contracts.
As of FY17, its bidbook stood at US$2.5 billion, while close to end of FY18, bidbook is at US$5.1 billion.
According to the source, the company intends to bid on US$7.9 billion worth of jobs in the next six to 12 months.
In terms of the chance of winning, it is quite modest as, he explained to theedgemarkets.com, the bidding will likely be just among Sapura Energy and four or five other competitors.
He noted that Sapura Energy already has a foothold in Southeast Asia, India, Australia, Brazil as well as Mexico, and is qualified in new markets such as the Middle East, Africa and Caspian, which will then increase the opportunity for the company in biddings.
Moreover, he explained that impairment will enable a lower cost base, enhanced competitiveness and improve profitability through savings from depreciation.
"No impact to goodwill as the business remains viable and relevant," he said, addressing the company's valuation.
Earlier this week, the company had announced new deals after bagging six contracts worth some RM3 billion since the beginning of the year, expanding its foray into New Zealand with a series of farm-in agreements to five offshore exploration permits in the oil and gas region of Taranaki Basin.
Wholly-owned subsidiary Sapura Exploration and Production (NZ) Sdn Bhd has secured the New Zealand government's approval for agreements with OMV New Zealand Ltd and Mitsui E&P Australia Pty Ltd.
At 2.30pm, shares in Sapura Energy were down one sen or 1.83% at 53.5 sen, with 59.4 million shares traded for a market capitalisation of RM3.27 billion.