Highlight SapuraKencana’s 1Q net profit falls 49%, pays 1.35 sen dividend

by **Cals** Tue 16 Jun 2015, 02:11

Highlight
SapuraKencana’s 1Q net profit falls 49%, pays 1.35 sen dividend

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By Joshua Lim / theedgemarkets.com | June 15, 2015 : 6:59 PM MYT

KUALA LUMPUR (June 15): [size=14]SapuraKencana Petroleum Bhd ([You must be registered and logged in to see this image.] Financial Dashboard)'s net profit plunged 49% to RM260.69 million or 4.37 sen a share for its first financial quarter ended April 30, 2015 (1QFY16) from RM509.42 million or 8.5 sen a share a year ago, mainly driven by lower operating profit from its energy division.

Revenue for 1QFY16 fell 7.6% to RM2.26 billion from RM2.44 billion in 1QFY2015.

Nevertheless, the group declared an interim dividend of 1.35 sen per share for the financial year ending Jan 31, 2016 (FY16), payable on Aug 28, 2015.

In a filing with Bursa Malaysia today, SapuraKencana said the energy segment's operating profit was 70% lower than RM198.0 million in Q1FY15, excluding the gain arising from acquisition of the subsidiaries.

Revenue for 1QFY16 also decreased by 43.6% compared with Q1FY15, primarily due to a combination of lower barrels of oil lifted as a result of the natural decline of oil reserves in the production sharing contract blocks and lower average price per barrels, it added.

Its engineering and construction segment also registered a lower operating profit of RM187.4 million, down 17.6% from RM227.5 million in 1QFY15.

"The segment registered marginally lower revenue by RM48.9 million or 4.3% mainly due to lower scope of works for the existing contracts in line with clients' planned activities, offset with higher contributions from newly executed international projects during the quarter," it added.

Going forward, the group anticipates the challenging environment to persist over the medium term.

"The group continues to refine its strategy to ensure competitiveness and resilience in weathering the industry cycles," it said.

SapuraKencana added that its continued efforts to secure and replenish the orderbook have resulted in new contract wins in India, Vietnam and Indonesia as well as a new market entry into Mexico, which should contribute to the current year and ensuing years’ results.

"However, due to clients’ cost cutting initiatives, the group will continue to face pressure on margins," it warned.

In a separate filing, the group said its wholly-owned subsidiary SapuraKencana TMC Sdn Bhd yesterday made a lodgement to the Securities Commission Malaysia (SC) for the launch of a multi-currency sukuk programme of up to RM7 billion, which will be used to refinance the company’s existing financings, as well as to fund the group's oil and gas related business requirements.

The programme has a tenure of 30 years.

SapuraKencana (fundamental: 1.3; valuation: 1.4) shares closed down 6.56% or 17 sen at RM2.42 today, for a market capitalisation of RM14.5 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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