KUALA LUMPUR: Bumi Armada Bhd’s net profit for the first quarter ended March 31, 2019 rose 28.49% to RM62.21 million from RM48.72 million a year ago mainly due to higher allowance for impairment losses of receivables in year-to-date (YTD) 2018 and lower depreciation as a result of impairment losses recognised on the Armada Kraken floating production storage & offloading (FPSO) and certain offshore support vessels (OSV) vessels during the financial year ended Dec 31, 2018.
The increase is also contributed by higher share of results from Karapan Armada Sterling III in YTD 2019 arising from lower tax expense due to recognition of deferred tax assets and lower management fees recognised in YTD 2019.
However, the group’s revenue fell 18.11% to RM491.6million compared with RM600.34 million in the previous year corresponding quarter mainly due to the completion of the LukOil project in the Caspian Sea in December 2018.
The Malaysia-based international offshore energy facilities and services provider said the floating production & offloading (FPO) business reported revenue of RM425.6 million. The decline versus Q1 2018 revenue is due to lower revenue from Armada TGT 1 FPSO, with the vessel now in its extension agreement contract.
The offshore marine services business reported revenue of RM66.0 million. The decline versus Q1 2018 revenue is due to Armada Installer and Armada Constructor completing their contracts at the end of 2018. The OSV segment was unchanged in Q1 2019, as fleet utilisation remained below 40%.
Offsetting the revenue decline were reductions in expense for cost of sales, selling and distribution cost, and administrative cost. In addition, the group had a stronger contribution from its joint venture and associates in Q1 2019, versus Q1 2018.
Bumi Armada executive director and CEO Gary Christenson said since the close of Q1 2019 the refinancing of its corporate debt has now been completed and it will monetise under-utilised assets to accelerate debt reduction.
In addition the group announced a new FPSO project for ONGC’s Kakinada 98-2 oil field with its Indian joint venture company.
“We are looking to stabilise the financial performance of the group through various efficiency and performance improvement initiatives. Our focus will be on improving our performance on Armada Kraken, selectively pursuing new FPO projects and strengthening the balance sheet to support growth going forward,” he said in a statement.
