Earlier provisions bump up SapuraKencana Q3 profit 18% to $36m

This was despite a 23% drop in revenue to MYR2.22bn from MYR2.89bn previously, it said in a stock market announcement.

SapKencana's bottomline this time around seems to have benefitted from the bounce off hefty provisions it made at the same last year. Provisions for impairment on property,

plant and equipment and oil and gas properties came up to MYR317.3m, a provision for impairment on investment of MYR28.3m and changes in provision of MYR80.9m were also made in the third quarter of 2015.

In turn, SapKencana's tax bill also was reduced by 40% to MYR41.8m from MYR68.1m previously. As a result, net profit was dramatically improved from the pre-tax figure of MYR199.3m, which was a very slight increase over the MYR198.0m earned in the third quarter of 2015.

At the segment level, the key engineering and construction division recorded pre-tax profit of MYR274.1m, down 23% from MYR354.0m previously. The group said the decrease is in tandem with the lower revenue and its corresponding scope of works. Revenue fell 15% to MYR1.57bn from MYR1.83bn previously.

The drilling segment saw pre-tax profit fall 34% to MYR34.0m as revenue fell by a third to MYR460.4m as rigs remained off charter.

Meanwhile the energy segment turned in a slight profit of MYR1.8m, which was a turnaround from the MYR132.9m loss posted in the previous corresponding period due to provisions for impairment on oil and gas properties made of MYR139.8m.

Giving its assessment of market conditions, SapKencana said: "Industry conditions remained uncertain in the third quarter and prolonged low levels of capital spending continues to pose significant challenges to the industry."

It added: "To enhance its competitiveness in replenishing the orderbook, the group remains focused on strengthening its position in existing markets and expanding into new markets, re-basing costs and improving operational efficiency."

Looking ahead, SapKencana said it expects the challenging environment to continue, but barring any unforeseen circumstances, is confident of achieving positive results for the financial year.

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