KUALA LUMPUR (Dec 13): Sapura Energy Bhd posted a net profit of RM30.89 million for its third quarter ended Oct 31, 2023 (3QFY2024) — more than double the RM10.18 million it recorded a year earlier — boosted by higher share of profits from associates and joint ventures (JVs), and an increase in foreign exchange (forex) gain.

It is also the group's third consecutive quarter in the black, as it had posted a net loss of RM3.3 billion in 4QFY2023 after recording massive impairment provisions.

Revenue for 3QFY2024 was down 13.42% to RM1.1 billion from RM1.28 billion in 3QFY2023, its bourse filing showed, mainly due to lower contribution from its engineering and construction (E&C) segment, which fell 17% to RM689.14 million from RM829.99 million amid lower completion of its projects.

The group’s profit before taxation (PBT) and impairment was at RM313 million, up 58.56% from the RM197.4 million it recorded in 3QFY2023, on higher share of profits from associates and JVs, as well as higher forex gain, though the increase was partially offset by higher finance costs.

“In the current quarter, the group has made provision for impairment on property, plant and equipment of RM12 million (3QFY2023: nil). As a result, the group recorded a PBT of RM63 million in the current quarter, lower by RM12.4 million compared to RM75.4 million in 3QFY2023,” Sapura Energy told Bursa Malaysia on Wednesday.

For the nine months ended Oct 31 (9MFY2024), Sapura Energy posted a net profit of RM219.78 million, more than double the RM99.52 million it made in 9MFY2023, although revenue slipped 4.06% to RM3.2 billion from RM3.33 billion.

On prospects, Sapura Energy said operating conditions for both its E&C and operations and maintenance (O&M) segments are expected to remain challenging for the rest of FY2024, exacerbated by the lack of access to working capital and bank guarantees as the group is undergoing a restructuring exercise to regularise its financial conditions. “In the drilling segment, one of the rigs in its fleet is expected to remain uncontracted until the end of this financial year,” it said.

"Financial constraints clipped our ability to improve business performance, particularly in terms of order book replenishment. While we work to resolve the financial limitations through a regularisation plan, there is also a critical need to bolster operational excellence, to preserve project margins and drive consistent results,” said group chief executive officer Datuk Mohd Anuar Taib in a separate statement.

Nevertheless, he is confident of Sapura Energy’s growth prospects, in line with its strategy to rebalance its global portfolio and deploy key assets to regions where it can be competitive. “To capitalise on opportunities across all our business segments, we are bidding right on major projects in Africa, the Mediterranean, the Atlantic, and the Asia Pacific regions. Trusted partnerships with clients and peers have helped us navigate challenges related to limited liquidity, enabling us to win more work,” he added.

The group’s order book currently stands at RM5.4 billion, said Sapura Energy, adding that its E&C and O&M segments are actively pursuing a number of prospects within and outside of Malaysia. The order book held by its JV and associate entities, meanwhile, stands at RM3.6 billion.

Earlier on Wednesday, Sapura Energy announced that it had received written confirmation from the Corporate Debt Restructuring Committee that at least 75% of the financiers of its RM10.3 billion multi-currency financing facilities had provided the requisite approval-in-principle for a proposed debt restructuring scheme. The exercise involves some RM1.5 billion in claims from vendors.

“The receipt of the approval-in-principle from the group's financiers on Dec 12 [Tuesday] marked an important milestone in the group's restructuring plan. This enables the group to proceed with the next phase of its regularisation plan to address its status as a PN17 issuer,” it said.

As at end-October, Sapura Energy had short-term borrowings of RM11.01 billion against cash, deposits and bank balances of RM1.37 billion.

Shares in Sapura Energy closed half a sen or 11.11% higher at five sen on Wednesday, valuing the group at RM798.95 million.

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