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Bumi Armada Slips Into The Red On Impairment Charges
Malaysia Daily Bulletin | 28 August 2015
  • Bumi Armada posted a net loss of RM291.5 million for 2Q15, in contrast to a net profit of RM98.4 million in 2Q14, attributable to a non-cash impairment charge of RM383.7 million it took during the quarter.
  • Excluding the charge, the company would have recorded an adjusted net profit of RM84.8 million.
  • The impairment was a write down of the carrying value of certain vessels in the transport and installation (T&I) and offshore support vessel (OSV) business units, and a non-core asset held in a joint venture due to the weak outlook for the oil and gas sector.
  • 2Q15 revenue also fell 22.2 percent to RM459.1 million due to lower utilisation of the vessels under the OSV and T&I business units. However, the group noted that its operations continue to generate positive net operating cashflows and core profit.

Significance: The firm added that its order book of RM25.8 billion, with potential extension options worth RM13.3 billion, will provide steady cashflows and earnings in the future. Meanwhile, Maybank Investment Bank Research has retained its ‘Buy’ call on the stock, though with a lower target price of RM1.20.

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