Sapura Energy recently completed the disposal of three drilling rigs to NKD Maritime Ltd as part of its portfolio rationalisation. (Sapura Energy pic)
PETALING JAYA: Sapura Energy Bhd continued its nascent recovery by posting a net profit of RM10.18 million in the third quarter ended Oct 31, 2022 (Q3 FY2023) compared with a huge net loss of RM669 million a year ago.
The improvement in earnings was due to lower recognition of provision for foreseeable losses, lower project costs recognised, lower depreciation, higher share of profit from associates and joint-ventures (JV), and a favourable foreign exchange gain.
However, revenue for the quarter under review declined 12.4% to RM1.28 billion from RM1.46 billion previously.
“The lower revenue in the corresponding quarter of the preceding year was due to a drop in revenue recognised from the engineering and construction (E&C) business segment due to a lower percentage of the completion of projects executed,” it said in a filing to Bursa Malaysia.
Nevertheless, things are looking up for the group. It charted a positive turnaround with stronger results compared to the previous quarter (Q2 FY2023) as well as the corresponding quarter a year ago, which saw a loss after tax and minority interests of RM3 million and RM669 million respectively.
It posted a cumulative net profit of RM99.53 million in the nine months ended Oct 31 (9M FY2023), compared with a massive RM2.28 billion cumulative net loss a year earlier.
It achieved an 8.7% increase in revenue for Q3 FY2023 of RM1.28 billion from RM1.17 billion in Q2 FY2023. This was mainly driven by the progress of ongoing projects, which contributed RM198 million, alongside a termination settlement of RM65 million.
In a separate statement, group CEO Mohd Anuar Taib said while there is “still much more to do”, Sapura Energy is pleased to record another quarter of improved results as it continues the momentum and press ahead with the implementation of the Reset Plan.
“Our priorities are clear, we are focused on improving the group’s cashflow and earnings before interest, taxes, depreciation, and amortisation (Ebitda), as well as strengthening our risk management and operations for long-term sustainability,” he said.
Mohd Anuar also said the group is committed to continuing its review of underperforming contracts as well as renegotiating commercial settlements with customers.
He acknowledged Sapura Energy faces a drawback in efforts to rebuild its order book, given the limited access to bank guarantees and working capital facilities during its restructuring phase, particularly impacting the E&C and operation and maintenance business segments.
Its drilling arm, however, recorded strong growth with 10 out of the 11 rigs fully operational at the end of Q3 FY2023.
The group’s order book currently stands at approximately RM6.8 billion, while the non-consolidated order book of the group’s JV entities is about RM5.7 billion.
In line with its aim of portfolio rationalisation, the group recently completed the disposal of three drilling rigs to NKD Maritime Ltd.
Following the Corporate Debt Restructuring Committee of Malaysia’s (CDRC) agreement to assist Sapura Energy in mediating its debt restructuring with lenders, the group submitted a draft proposed restructuring scheme (PRS) to the CDRC on Sept 29 this year.
It has since been participating in CDRC-mediated meetings with financial institutions to seek feedback on and to refine the terms of the PRS.
This draft restructuring proposal will form part of its overall restructuring and regularisation plan, which upon finalisation will be submitted to Bursa Malaysia. Additionally, Sapura is nearing the end of its proof of debt exercise with its trade creditors
Its share price jumped 14.29% or half a sen to close at four sen today, giving the group a market capitalisation of RM639 million.
