KUALA LUMPUR: SapuraKencana Petroleum Bhd, the country’s largest oil and gas (O&G) services firm by market value, saw its full-year net profit grow 31.8% to RM1.43 billion. But higher depreciation and foreign exchange loss dragged down its net profit for the fourth financial quarter ended Jan 31, 2015 (4QFY15) by 61.7% to RM129.13 million.

In a filing with Bursa Malaysia yesterday, SapuraKencana (fundamental: 1.3; valuation: 1.8) said provision for impaired receivables and properties curbed profit growth in 4QFY15 as the group contended with lower crude oil prices.

“The global O&G industry is experiencing difficult times,” it said.

Net profit fell to RM129.13 million in 4QFY15 from RM337.23 million a year ago. Revenue, however, rose 27% to RM2.39 billion against RM1.88 billion.

For 4QFY15, SapuraKencana said offshore construction and subsea service revenue fell 10.6% while the drilling and energy services division’s revenue rose 38.8%. Income from fabrication, hook-up and commissioning operations was 51.5% higher.

SapuraKencana’s income statement showed that depreciation and amortisation were significantly higher at RM476.27 million compared with RM182.78 million.

The group also reported a RM54.94 million provision for impaired O&G properties. There was no provision for these assets a year earlier.

For the full FY15, SapuraKencana saw its net profit rise 31.8% to RM1.43 billion from RM1.09 billion in FY14. Revenue was higher at RM9.94 billion against RM8.38 billion.

On prospects, SapuraKencana said the environment for the O&G industry remains challenging in the short to medium term and the group will see pressures on both revenues and margins.

President and group chief executive officer Tan Sri Shahril Shamsuddin said the group expects the market to remain challenging due to volatility in oil prices.

“However, we have operated and thrived in challenging markets. We are confident with our continued focus on operational effectiveness, cost optimisation and our aggressive drive to win new businesses worldwide,” he said in a statement yesterday.

SapuraKencana’s order book stood at RM26 billion, which will keep the group busy for the next three years.

The stock closed unchanged at RM2.30 yesterday, bringing a market capitalisation of RM13.72 billion. The stock has fallen 1% this year, underperforming the FBM KLCI’s 3% rise.

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This article first appeared in The Edge Financial Daily, on March 25, 2015.