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Provisions lower Bumi Armada Q1 profit to $6m

Provisions lower Bumi Armada Q1 profit to $6m
Bumi Armada saw first quarter net profit plunge to MYR23.4m ($5.7m) from MYR72.0m in the previous corresponding quarter mainly due to a MYR 17.9m non-cash impairment charge but also a 25% drop in revenue to MYR430.8m  from MYR572.2m a year ago.

Excluding the charge for stacking the multi-purpose platform support vessel, the group would have reported net profit of MYR41.3, Bumi Armada said in a stock market release. 

The decline in revenue was mainly due to lower contributions from the Armada Claire FPSO, in respect of which the Company has filed a legal action seeking damages for unlawful termination and lower utilisation of vessels in the OMS business, the group said.

In terms of segments, the floating production storage and offloading (FPSO) and floating gas solutions (FGS) businesses saw revenue decline by 26% year-on-year, while the offshore marine services (OMS) segment saw revenue fall by 24%.

The group’s total order book as at end-March 2016 however remains healthy, standing at MYR36.4bn, consisting MYR24.2bn in firm contracts and MYR12.2bn of optional extensions.

Bumi Armada ceo and ed Leon Harland said: “The underlying earnings of the group remain strong, with net cash flow generation from operations of MYR544.4m in Q1 2016, and EBITDA margin improving to 58.4% in Q1 2016, from 50.2% in Q1 2015.

"The FPSO and FGS businesses continue to focus on the delivery of the three FPSOs (Armada Kraken, Armada Olombendo and Karapan Armada Sterling III) and the FSU (Armada LNG Mediteranna), which all leave the shipyard in the second half of 2016. Delivery of these projects will trigger a significant improvement in earnings and cash flow generation for the group over full year 2017," he added.

Harland noted that while the offshore supply vessel (OSV) business "remains challenging", the group's strong position in the Caspian Sea with its subsea construction operations should help to stabilise overall earnings in the OMS business, where the firm order book stands at MYR2.8bn as at end March 2016.