Bumi Armada has been forced to take a huge impairment of MYR 1.1bn ($246.6m) on the value of its offshore support vessel (OSV) fleet.
The write-down helped push the Malaysian FPSO specialist to a fourth quarter loss of MYR 1.3bn. Twelve months ago its losses were just MYR 86.8m.
Revenue for the fourth quarter was down 65% to MYR 205m, but this was partially offset by a 34.6% reduction in the cost of sales.
Bumi Armada said the decline in revenue was due to a lack of conversion activities at its FPSO and floating Gas Solutions (FGS) divisions.
There were also reduced contributions from the Armada Claire, Armada Perdana and Armada Perkasa FPSOs.
“The large impairment we have taken indicates that we are addressing the burden of severe underutilisation of several assets, particularly in the OSV segment,” said Bumi Armada.
“This segment of the market has a huge oversupply of vessels and there is wide consensus in the industry that this situation will continue for the coming years.
“The impairments also relate to two of our older and smaller size FPSOs, for which we see a reduced number of redeployment opportunities in the future.”
Bumi Armada ended the full-year with a loss of MYR 1.9bn compared to the loss of MYR 241m reported for 2015.
“These results reflect the dynamic situation that Bumi Armada is in today,” said chief executive Leon Harland.
“The lower revenues stem from the fact that our four new projects, each complex and innovative in their own right, have left the conversion yard and are progressing to be put into production.
“Additionally, compared to last year we have reduced incomes from Armada Claire and our Nigerian FPSOs as well.
“The offshore marine services business continues to struggle with low demand due to continued weak activity and seasonal slowdowns, which also added to the substantial reduction of revenues in the fourth quarter of 2016.
“Despite all this, the group has generated over MYR 1bn in net cash flows from operating activities over the full year.”
