Bumi Armada posts better 3Q earnings

The company’s core earnings are improving on Kraken FPSO vessel that has achieved 90% performance

by FARA AISYAH/ pic credit: bumiarmada.com 

THE prospects for Bumi Armada Bhd are improving on the higher utilisation rate of its Armada Kraken floating production, storage and offloading (FPSO) vessel.

Rakuten Trade Sdn Bhd research VP Vincent Lau said the energy services group’s financial results in the third quarter ended Sept 30, 2019 (3Q19), were within analysts’ expectations.

“Bumi Armada’s core earnings are improving quarter-to-quarter and its previously problematic Armada Kraken FPSO vessel has achieved 90% performance. The worst may be over for them. We expect better performance in 4Q and beyond,” he told The Malaysian Reserve.

Lau said the confidence in Bumi Armada’s prospects is also reflected in its share price which has gained investor interest.

Bumi Armada’s share price has risen 212.5% year-to-date, to close at 50 sen last Friday.

The company has gained RM2.03 billion in market capitalisation and is now valued at RM2.97 billion.

The Malaysia-based international offshore energy facilities and services provider posted a net loss of RM2.3 billion in financial year ended Dec 31, 2018, compared to a net profit of RM352.25 million in the previous year.

Bumi Armada returned to the black in 1Q19, and has been maintaining its profitability since September 2019.

For 3Q19, it made a net profit of RM153.37 million against a net loss of RM502.83 million a year ago.

Bumi Armada stated in its exchange filing last Friday, the earnings were boosted by RM81.8 million of other operating income, which included gain on disposal of joint ventures (JVs) and property, plant and equipment, and higher share of results from JV arising from tax exemptions obtained for Armada Sterling FPSO and Armada Sterling II FPSO in the quarter.

Earnings per share for the quarter was 2.61 sen compared to a loss per share of 8.56 sen in 3Q18.

Quarterly revenue decreased 10.24% year-on-year to RM527.81 million.

“In 3Q19, our floating production and operation business was stable, registering a 2.3% improvement in revenue over 2Q19,” Bumi Armada ED and CEO Gary Christenson said in a statement.

“In the offshore marine services business, we disposed of five more offshore support vessels in 3Q19 and we continue to pursue new contracts for our two subsea construction vessels in the Caspian Sea,” he added.

Christenson said Bumi Armada will focus on safety, improvements in overall operational performance, financial efficiencies and the monetisation of selected assets.

The group’s orderbook as at 3Q19 was RM18.5 billion, with additional optional extensions of up to RM10 billion.