SapuraKencana plunges to $320m Q4 loss on provisions

As a result it has taken the hit of posting a fourth loss of MYR1.28bn ($320m) and ultimately a full-year net loss of MYR791.5m compared to net gains of MYR129.1m and MYR1.4bn in the previous corresponding period.

A stock market announcement showed that the losses however overshadow a reasonable performance for the services company, with fourth quarter revenue down just slightly to MYR2.23bn from MYR2.39bn previously, while full-year revenue came in at MYR10.18bn of revenue.

Without the whopping MYR1.14bn provision for impairment on property, plant and equipment and oil and gas properties and further charges for writing off a deposit on proposed acquisition of oil and gas assets of MYR172.5m, taken in the fourth quarter, SapKen's actually turned in a pre-tax profit MYR1.4bn with margins of 14%.

SapKen is also in a better cash flow position than the previous year with cash and bank balances of MYR1.9bn as at Jan 31 compared to MYR1.2bn at the end of financial year 2015 and net debt over equity stood at 1.31 times.

Current orderbook is valued at MYR21.3bn with visibility till 2019 and year-to-date, SapKen's new orders stood at MYR4.5bn.

President and group ceo Shahril Shamsuddin said the group would continue to manage the current industry pressures through aggressive implementation of the group initiatives to reset costs to match the low oil price environment.

“We will continue to strengthen key capabilities and ensure our cost base is competitive in a US$30 oil price environment with the embedded agility to benefit as the industry recovers” he said.

At the segment level, SapKen's services divisions (drilling and engineering & construction) reported an operating profit of MYR1.16bn for the quarter.

However, this was countered by the energy division's operating loss of MYR1.4bn mainly due to the weak oil price environment and the resulting provisions for impairment made.

Looking ahead, Shahril still anticipated pressures on the group’s margins in the near term but remained confident in SapKen's ability to deliver fit-for-purpose solutions for their customers.

“We will navigate this period with an enhanced focus on opportunities in key markets such as in South East Asia, India, the Middle East and Mexico,” he said.