Malaysia's SapuraKencana Posts 7.1% Gain in 2Q FY17 PAT to $27M

Malaysia's SapuraKencana Petroleum Berhad, an integrated upstream oil and gas services provider, recorded a 7.1 percent increase in profit after tax (PAT) to $27.15 million (MYR 111.64 million) for the second quarter of financial year 2017 (2Q FY17) that ended July 31, compared to $25.36 million (MYR 104.27 million) a year ago, according to quarterly results released Wednesday by the company.

Company revenue, however, did not match the gains in PAT during the quarter, as turnover fell 40.2 percent to $410 million (MYR 1.68 billion), down from $680 million (MYR 2.80 billion) in the corresponding period in FY16.

SapuraKencana's engineering and construction (E&C) business unit remains its largest income earner in 2Q FY17 at $193.78 million (MYR 796.70 million), a decline of 51.4 percent from 2Q FY16's $400 million (MYR 1.64 billion) due to lower activities during the quarter. Its drilling business generated $130.79 million (MYR 537.72 million) in revenue during the quarter, compared to $190.64 million (MYR 783.82 million) in the previous year, or a decline of 31.4 percent amid lower contribution from rigs which were off contract.

The Energy segment, comprising its upstream oil and gas assets, posted the smallest decline among the business units as it registered a revenue of $85.92 million (MYR 353.27 million), a decline of 21.5 percent from last year's $109.44 million (MYR 449.95 million). The company said the fall in revenue was due to lower average realized oil price achieved in 2Q FY17.

Commenting on the company's performance, SapuraKencana President and Group CEO Shahril Shamsuddin noted that the firm has recorded 2 positive quarters in the current financial year.

"Our commitment to high standards of safety, quality and efficiency has enabled SapuraKencana Petroleum Berhad to secure $800 million (MYR 3.3 billion) of work globally year to date which include notable wins in Mexico for the KMZ Project pipeline and subsea installation as well as our first project in Europe with the Trans Anatolian Pipeline (TANAP). The six-vessel pipelay fleet in Brazil is now fully operational with high utilization rates of 99 percent," Shahril said in the press release.

Still, SapuraKencana expects the industry outlook to remain challenging.

"The Group anticipates stiff competition globally resulting in further pressure on margins. Transformative action is in place to deliver on lower costs and increased productivity, ensuring long-term sustainability of our business," he added.