Bumi Armada in the red for Q3

KUALA LUMPUR: Offshore energy facilities and services provider Bumi Armada Bhd saw a net loss of RM96.71 million for the third quarter ended Sept 30, 2016 compared with a net profit of RM70 million a year ago, as a result of lower contributions across business units as well as provisions for doubtful debts of RM79.6 million.
Revenue for Q3 was RM377.5 million, 32.5% lower than the corresponding quarter in 2015, mainly due to a 68.2% fall in floating production storage offloading system (FPSO) and floating gas solutions (FGS) revenue on the back of completion of conversion activities on the Eni 1506 and Kraken FPSO projects and reduced contributions from Armada Claire, Armada Perdana and Armada Perkasa.
For the nine months period, the group’s net loss widened to RM591.61 million against a net loss of RM149.49 million a year ago due to reduced contributions from the FPSO & FGS segment, net allowance for doubtful debts of RM75.9 million and a one-off gain on deemed disposal of a subsidiary in the nine months of 2015, of RM17.6 million.
Its revenue decreased 24% to RM1.21 billion compared to RM1.59 billion in the financial period up to Sept 30, 2015 mainly attributed to lower conversion activities from the Eni 1506 and Kraken FPSO projects as these projects are near completion, reduced contribution from Armada Claire, Armada Perdana, Armada Perkasa and offshore support vessels (OSV) due to lower vessel utilisation.
Commenting on the Q3 financial results, Bumi Armada executive director and CEO Leon Harland said the third quarter of 2016 continued to be challenging as the outlook for global growth, as well as geopolitical uncertainty, continued to undermine oil prices, which in turn limited new activities by oil companies.
He said the offshore marine services (OMS) business revenue improved arising from increased subsea construction activity in the Caspian Sea. The OSV segment continues to be challenging, with rates under pressure due to the low demand and over supply of available vessels.
“While we have reported lower revenue from our FPSO and FGS segment in the third quarter of 2016 as projects completed their conversion activities, the positive is that these projects are now moving towards their operational locations.”
The Armada LNG Mediteranna, Armada Olombendo and Armada Kraken have all been mobilised for their respective operational locations in Malta, Angola and the North Sea.
“We now enter the hook-up and commissioning stages to bring these new units on-line in 2017, when they will start to generate steady cash flow going forward.
“On a positive note, we have seen an improvement in FPSO project tendering and pre-qualification activities as oil companies start to look at bringing selected new fields into production,” Harland said in a statement.