ARMADA (5210) - Full steam ahead for Bumi Armada with Q2 earnings of RM116m


KUALA LUMPUR: International offshore energy facilities and services provider Bumi Armada Bhd's continued with its turnaround story, with earnings of RM116.59mil in the second quarter, boosted by the floating production and operations (FPO).

It announced on Friday the earnings were in stark contrast with the net losses of RM518.32mil a year ago.

Bumi Armada's revenue also increased by by 72.3% to RM694.42mil from RM402.87mil a year ago. Earnings per share were 1.99 sen compared with loss per share of 8.84 sen.

For the first half, its earnings were RM164.69mil compared with net losses of RM494.89mil in the previous corresponding period. Revenue rose just 0.26% to RM1.098bil from RM833.64mil.

Commenting on the second quarter results, Bumi Armada said the FPO business segment revenues in Q2 jumped116.9% on-year to RM337.6mil.

The sharp increase was due to higher revenue from the Armada Olombendo floating production storage and offloading (FPSO) and the Armada LNG Mediterrana FSU respectively, as well as the absence of supplementary payments to the charterer of the Armada Kraken FPSO, which impacted Q1 2017 revenue.

As for offshore marine services (OMS) revenue, it rose 44.3% on-year to RM356.8mil, underpinned by higher revenue from the LukOil project.

“OSV utilisation in Q2 2017 improved to 53% from 42% in Q1 2017, helped by increased activity post-monsoon season, and the sale of four older vessels during the quarter,” it said.

Bumi Armada said the Q2, 2017 earnings before interest, tax, depreciation and amoritsation (EBITDA) rose 72.4% to RM428.2mil from RM248.4mil in Q1. From a year-ago, it rose 115% from RM198.7mil.

Driving the stronger performance was stronger contributions from both the FPO and OMS segments.

The group’s EBITDA margin increased to 61.6% in Q2,2017, as compared to 49.3% in Q2 2016.

“As the new large projects started to come on-stream in Q2 2017, so did the project finance obligations related to them, and as a result, the droup saw a substantial increase in its financing costs,” it said.

However, it said contributions from joint ventures were lower on a year-on-year comparison, primarily due to the lower level of project conversion activity, and resulting lower conversion income, on Karapan Armada Sterling III in Q2 2017 as compared to Q2 2016. 

Bumi Armada executive director and CEO Leon Harland said the improvements in the second quarter performance highlighted the ongoing recovery in the group, despite the relatively subdued market conditions.

“The FPO business is ramping up as our new major projects have come on-line and are contributing positively.

“In the second quarter of 2017, we had a full quarter of contributions from both the Armada LNG Mediterrana Floating Storage Unit (FSU) and the Armada Olombendo FPSO in Malta and Angola, respectively,” he explained.

Harland expected better financial performance after revenue contribution for the Armada Kraken FPSO in UK towards the end of Q2.

He also said since the Karapan Armada Sterling III FPSO in Indonesia had passed its 72-hour test since the end of Q2 2017 and starting to contribute as well, “we will further improve the income streams for the group in the second half of 2017 and will complete a challenging, but progressive transformation year in our FPO business unit”.

As for the OMS business unit, the subsea construction results in Q2 2017 were stronger on the back of good performance in the pipelay activities in the Caspian Sea.

Harland said with the recently announced supplementary contract from LukOil, Bumi Armada had secured additional work with an existing client.