KUALA LUMPUR (March 30): Bumi Armada Bhd (KL:ARMADA) has proposed a RM1.95 billion capital reduction to eliminate accumulated losses. It is also seeking shareholders' approval to undertake share buy-backs.
The proposed capital reduction will erase RM1.45 billion in accumulated losses as at December 2024, leaving the company with retained earnings of RM498.59 million, according to a bourse filing on Monday. At the group level, retained earnings will rise by RM262.98 million to RM2.21 billion.
The accumulated losses were largely driven by impairment charges linked to the underperformance and low uptime availability of the Armada Kraken floating production, storage and offloading vessel (FPSO), as well as weaker vessel utilisation and declining day rates in the offshore support vessels segment.
These factors contributed to one-off impairments of RM2.24 billion in the financial year ended Dec 31, 2018 (FY2018), followed by further charges in subsequent years.
As at Feb 27, Bumi Armada’s issued share capital stood at RM4.34 billion, comprising 5.93 billion ordinary shares. Following the capital reduction, the figure will be trimmed to RM2.34 billion.
In its filing, the group said the capital reduction exercise is intended to rationalise its financial position by eliminating accumulated losses, thereby enabling future buy-backs from retained earnings.
Shareholders’ approval will be sought at an extraordinary general meeting, with completion targeted for the third quarter of 2026.
Meanwhile, the buy-back mandate, once approved, will give the group flexibility to deploy surplus cash not immediately required for operations or capital expenditure.
Bumi Armada noted that the initiative could support its share price when undervalued, enhance investor confidence, generate gains from the resale of treasury shares, allow distribution of treasury shares as dividends and preserve working capital by using treasury shares as consideration in corporate transactions.
The group said any implementation will be subject to prevailing market conditions and the group’s operational and investment needs.
Bumi Armada currently operates seven FPSO units and one liquefied natural gas floating storage unit across Asia, Africa and Europe, alongside two construction vessels.
For FY2025, the group’s net profit fell 31% to RM439.05 million from RM634 million in FY2024, mainly due to lower contributions from the Armada Kraken and Armada Olombendo FPSOs.
Revenue dropped to RM1.59 billion from RM2.3 billion. This was despite a RM145.97 million impairment reversal in the fourth quarter, which helped deliver a quarterly net profit of RM81.2 million compared to a net loss of RM76.19 million a year earlier.
As at Dec 31, 2025, the group’s total assets stood at RM8.76 billion, down 16% from 2024, reflecting foreign exchange impacts, depreciation of property, plant and equipment, lower finance lease receivables, dividends received from joint ventures and customer collections.
Total liabilities fell 35% to RM2.89 billion, mainly due to foreign exchange effects, repayment of customer advances and borrowings.
Shares in Bumi Armada closed up one sen or 3.1% at 33 sen on Monday, giving the group a market value of RM1.96 million. The stock has dropped by over 40% in the last one year.