SapuraKencana Q2 earnings aided by Berantai RSC cessation

PETALING JAYA: SapuraKencana Petroleum Bhd’s net profit for the second quarter ended July 31, 2016 jumped 8% to RM112.27 million from RM104.09 million a year ago helped by a RM1.3 billion recognition in relation to the cessation of the Berantai risk service contract (RSC).
Included in the Q2’16 pre-tax profit was provision for impairment on oil and gas properties of RM539.9 million.
Revenue was 40.2% lower at RM1.68 billion compared with RM2.80 billion in the corresponding quarter of the preceding year, due to lower contribution from all three segments of engineering and construction, drilling and energy.
SapuraKencana said the continued uncertainty in oil prices has resulted in prolonged low levels of capital spending within the oil and gas industry. The group’s strategic focus remains on strengthening positions in existing markets and expanding into new markets, rebasing costs and enhancing operational efficiency.
The board expects the challenging environment to persist, but is confident that the group will be able to navigate the year satisfactorily.
“Our commitment to high standards of safety, quality and efficiency has enabled SapuraKencana to secure RM3.3 billion of work globally year to date,” its president and group CEO Tan Sri Shahril Shamsuddin said in a statement.
The industry outlook remains challenging and 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,” Shahril said.
For the six months period, its net profit fell 40% to RM222.58 million from RM364.78 million in the corresponding period. Revenue at RM3.62 billion was 28.5% lower than RM5.06 billion in the corresponding period of the preceding year.