SAPURA ENERGY Q3 FY2025 RESULTS: REVENUE REMAINS STEADY, BUT EARNINGS DAMPENED BY FOREIGN EXCHANGE LOSSES

Date: 12.12.2024.

Summary of Q3 FY2025 financial results:

Revenue of RM1.15 billion
EBITDA of RM2 million
LATAMI of RM293 million
Group order book at RM6 billion, order book of joint ventures at RM5.8 billion.
Year-to-date free cash flow of RM252 million

Sapura Energy Berhad ("Sapura Energy" or "the Group") today announced its financial results for the third quarter ended 31 October 2024 (“Q3 FY2025”), demonstrating consistent revenue performance.

For Q3 FY2025, Sapura Energy reported a revenue of RM1.15 billion, representing a 4.4 percent increase compared to the RM1.10 billion posted in the corresponding quarter of financial year 2024 (“Q3 FY2024”). The increase in revenue was primarily driven by higher progress of ongoing projects and favourable settlement of claims in Engineering and Construction (“E&C”); and higher activity levels in Operations and Maintenance (“O&M”), offset by lower rig activities in the Drilling segment.

Despite the increase in revenue, the Group recorded a Loss After Tax and Minority Interest (“LATAMI”) of RM293 million for the quarter, compared to a Profit After Tax and Minority Interest (“PATAMI”) of RM30.9 million in Q3 FY2024. This was mainly due to unfavourable foreign exchange losses amounting to RM213 million in Q3 FY2025, arising from the weakening of the US Dollar against the Malaysian Ringgit. Comparatively, the Group saw foreign exchange gains of RM271 million in the corresponding quarter of the previous financial year. The Group’s bottom line in Q3 FY2025 was also impacted by a lower share of profit from associates, which decreased by RM93.7 million because of reclassification of SapuraOMV Upstream Sdn Bhd (“SapuraOMV”) to asset held for sale since first quarter of financial year 2025.

While Sapura Energy effectively maintains a natural hedge against foreign currency exposure at an operational level, the Group is impacted by unrealized foreign exchange losses arising from its existing multi-currency financing facilities. “As we mentioned previously, this underscores the critical importance of restructuring our debt portfolio to mitigate these risks. We are actively working with lenders and creditors to accelerate this exercise and enhance the Group's financial stability and resilience for the future”, said Interim Chairman Shahin Farouque bin Jammal Ahmad.

The Group remains cash-generative, with RM252 million in free cash flow year-to-date in financial year 2025. The Group's unrestricted cash balance stood at RM1.59 billion as at 31 October 2024.

Operational Highlights

All business segments posted positive Earnings Before Interest, Taxes, Depreciation and Amortisation (“EBITDA”), but the earnings were eroded at the Group level due to the unfavourable foreign exchange movement recorded in the Corporate segment. The Group’s EBITDA for the quarter was only RM2 million, the lowest recorded thus far in the financial year. Excluding the impact of foreign exchange losses of RM213 million, the normalized Group EBITDA for the quarter is RM215 million.

E&C contributed RM181 million EBITDA at a margin of 26 percent, on the back of RM700.3 million in revenue, up from RM689.1 million in Q3 FY2024. This growth was attributed to the favourable settlement of claims and higher project activities.

O&M reported a revenue of RM192.8 million, an increase of 21.5 percent compared to RM158.7 million posted in Q3 FY2024, resulting in an EBITDA of RM33 million with a 17 percent margin. The improved revenue was driven by higher activity levels and successful project execution.

The Drilling segment saw its revenue decline to RM280.6 million, down from RM326.4 million in Q3 FY2024, mainly due to lower rig utilization and the completion of a contract in Q2 FY2025. Nevertheless, Drilling showed stable performance with an EBITDA of RM101 million, at a margin of 36 percent.

Looking ahead

Financial constraints continue to limit Sapura Energy’s business expansion, especially in order book replenishment, where it trails major international peers. The Group’s current order book stands at RM6 billion, while the non-consolidated order book held by its joint venture and associated entities is valued at RM5.8 billion, representing Sapura Energy’s 50 percent share. Nevertheless, the order book value has improved year-on-year, rising from the RM5.4 billion posted in Q3 FY2024 for the Group; and RM1.8 billion for its joint venture and associated entities in the same period.

The Group will continue to focus on securing opportunities across all its business segments, leveraging on trusted partnerships with clients and peers to navigate challenges related to limited liquidity. Recent wins include a five-year contract for the provision of Pan Malaysia offshore maintenance, construction, modification and hook-up and commissioning services; a 30-kilometre offshore pipeline project in Brazil; and a one-year contract for tender-assisted rig and services in Malaysia.

Meanwhile, Sapura Energy continues to progress its restructuring plan, which includes efforts to resolve its unsustainable level of debt and amounts owed to trade creditors. The Group announced it has completed the divestment of its 50 percent equity interest in SapuraOMV to TotalEnergies Holdings SAS ahead of schedule. The portfolio rationalization will help address Sapura Energy’s unsustainable debt and outstanding payables, while enabling it to maintain a sharp focus on its core capabilities in energy solutions. On 18 November 2024, Sapura Energy submitted an application to Bursa Malaysia Securities Berhad for a further six months’ extension to submit its regularization plan.

Commenting on the results, Shahin said, "Despite financial constraints and the impact of foreign exchange losses, we have demonstrated resilience and operational excellence in delivering our promises to clients. This reflects our fundamental strength and capability to achieve results even in challenging conditions. As we intensify our efforts to effectively execute our Reset Plan, we remain equally dedicated to ensuring the Group's long-term sustainability.”

Cautionary note: "Sapura Energy", "the group" and "the company" are used for convenience where references are made to Sapura Energy Berhad in general. Similarly, words like "we", "us" and "our" are used to refer to Sapura Energy Berhad in general or to those who work for the company and its subsidiaries, where relevant. This press release may contain forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding our financial position, financial estimates, business strategies, prospects, plans and objectives for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. Such forward-looking statements reflect our current view with respect to future events and are not a guarantee of future performance. Forward-looking statements can be identified by the use of forward-looking terminology such as the words "may", "will", "would", "could", "believe", "expect", "anticipate", "intend", "estimate", "aim", "plan", "forecast" or similar expressions and include all statements that are not historical facts.