KUALA LUMPUR (March 25): Sapura Energy Bhd said that it is “not out of the woods” yet despite net loss narrowing to RM728.44 million in the fourth quarter ended Jan 31, 2024 (4QFY2024) from RM3.26 billion a year before.

The improvement was mainly attributed to lower provision of impairment.

"While we have made progress, we are not yet out of the woods. The reset plan is very complex, and there remains a lot of hard work ahead of us before we achieve long-term financial and operational stability,” Sapura Energy chairman Datuk Mohammad Azlan Abdullah said in the bourse filing.  

The oil and gas engineering firm said it did not make any impairment on goodwill on consolidation in the current quarter, versus RM1.46 billion made in 4QFY2023.

It added that the provision for impairment on property, plant and equipment came in lower at RM13.8 million in 4QFY2024 from RM1.16 billion a year before.

Lower depreciation and amortisation also helped the quarterly result, which stood at RM119.72 million, down by 38.67% from RM188.75 million a year earlier.

The better quarterly earnings were also supported by a lower share of loss from associates and joint ventures of RM93.49 million in 4QFY2024, more than half the amount recorded previously at RM215.29 million, while net foreign exchange loss also narrowed to RM126 million from RM398.71 million a year ago.

Hence, its loss per share came in at 4.33 sen in 4QFY2024 versus 20.38 sen in 4QFY2023.

Quarterly revenue dropped 13.01% to RM1.06 billion from RM1.22 billion in 4QFY2023, due to lower revenue recognised from the engineering and construction, and drilling business segments.

For the full year FY2024, its net loss also narrowed to RM508.66 million from RM3.16 billion in FY2023, while its annual revenue fell 6.45% to RM4.26 billion from RM4.55 billion previously.

The lower annual loss was also due to lower impairment of RM387.02 million from RM483.39 million. Together, it was also boosted by a higher share of profits in associates and joint ventures and higher foreign exchange gain.  

Mohammad Azlan said the operating conditions for engineering and construction, and operations and maintenance segments continued to be adversely affected by the lack of access to working capital and bank guarantee facilities.

“This is further exacerbated by project execution challenges for projects in Malaysia and West Africa, which have been operationally completed,” he added.  

Sapura Energy is proactively pursuing contractual resolutions with the respective clients.

Looking ahead, the cash-strapped company remains cautiously optimistic about its business prospects in FY2025.

“The group is committed to its operational turnaround by focusing on efficiency improvements, enhancing client relationships, and fostering greater collaboration with clients, partners and vendors,” said Sapura Energy group chief executive officer Datuk Mohd Anuar Taib.

Both engineering and construction and operations and maintenance segments are actively pursuing several prospects, focusing on fabrication, transportation & installation, subsea inspection, repair and maintenance.

Currently, the group's orderbook stands at RM5 billion.

On Monday's closing bell, Sapura Energy’s share price closed 0.5 sen or 11.1% lower at four sen, bringing the group a market capitalisation of RM735 million.