Impairments of RM2.6 bil drag Sapura Energy to 4QFY23 RM3.3 bil losses

KUALA LUMPUR (March 30): Higher impairment provisions of RM2.62 billion have dragged cash-strapped Sapura Energy Bhd to another huge quarterly net loss of RM3.3 billion in its fourth quarter ended Jan 31, 2023 (4Q2023).

Of the RM2.6 billion impairment charges, RM1.46 billion is related to goodwill on consolidation, associated with higher weighted average cost of capital arising predominantly from a global interest rate hike.

Another RM1.16 billion impairment was provided for plant and equipment, amid a revised business outlook, mainly due to limited working capital and bank guarantee facilities and a projected market down-cycle in the medium to long term, Sapura Energy said.

Year-non-year, the group narrowed its net losses to RM3.3 billion against RM6.76 billion the year before – its worst quarterly showing – which saw impairments of RM5.39 billion.

Excluding the impairments, the latest quarter saw Sapura Energy continue delivering operating profit at RM285.43 million, from operating loss of RM995.75 million.

Revenue nearly tripled to RM1.21 billion from RM426.6 million a year ago, primarily driven by a higher percentage of completion for projects from the engineering and construction (E&C) segment, and higher rig utilisation.

However, forex losses amounting to RM396.61 million in 4Q23 compared to RM25.56 million a year earlier also impacted earnings, coupled with higher depreciation and amortisation, write-down on inventories, higher finance costs and joint venture losses.

For the full year of FY2023, Sapura Energy recorded a net loss of RM3.2 billion which is lower against RM9.05 billion net losses recorded in FY2022, while revenue rose 10.9% to RM4.55 billion in FY23 from RM4.10 billion a year earlier.

For 2024, Sapura Energy said the group will continue to implement its Reset plan to address unsustainable debt and resolve overdue claims by trade creditors.

It has presented a draft Proposed Restructuring Scheme (PRS) to financiers on Oct 20 2022. While details are being ironed out, the Corporate Debt Restructuring Committee (CDRC) has extended the standstill period for Sapura Energy up to Sept 9, 2023.

CDRC in September 2022 approved Sapura Energy’s application for assistance to mediate debt restructuring negotiations with financiers of its Multi-Currency Financing (MCF) Facilities.

“Through CDRC’s mediation, we aim to reach an understanding and in-principle approval with financiers on the complex debt restructuring exercise involving RM10.3 billion in MCF Facilities,” the company said in a separate statement.

Shares of Sapura Energy shares fell 12.50% or half sen to 3.5 sen per share, giving the company a market capitalization of RM559.27 million.