KUALA LUMPUR (Nikkei Markets) -- Malaysian oil and gas services firm Sapura Energy on Thursday warned of challenging times for the industry after its net loss for the fiscal third quarter sharply widened from a year earlier mainly due to higher operating expenses.
The latest earnings that trailed market expectations sent its share price lower.
"The outlook for the oil and gas industry remains challenging," Sapura Energy said, while reporting net loss for the three months ended Oct. 31 at 100.89 million ringgit ($24.18 million) compared with a net loss of 31.09 million ringgit over the same quarter last year. Quarterly revenue rose 47.4% on year to 1.78 billion ringgit from 1.21 billion ringgit.
Still, it is confident in its ability to remain competitive to further grow its order book in existing and new markets.
The company separately announced that it has secured several new contracts and contract extensions for its engineering-and-construction as well as drilling segments worth a combined 615 million ringgit. Value of current orders in hand amounted to 15.1 billion ringgit.
"We will continue to focus on turning the corner as we further enhance operational performance, and identify and pursue opportunities globally," said Chief Executive Shahril Shamsuddin.
However, potential losses through the coming quarters could further blur Sapura Energy's turnaround prospects as current outstanding orders carry poor profit margins, analysts said.
"Initially we expected the company to breakeven in FY21," said MIDF Amanah Investment Bank's Analyst Noor Athila Mohd Razali. However, that could stretch to the financial year ending Jan. 31, 2022 on the back of higher revenue and better margins as projects develop, she said.
Earnings of Sapura, which builds various offshore structures and leases out its drilling rigs, have been under pressure since financial year 2016 even as the industry has largely recovered from a precipitous fall in crude oil prices.
The company has borrowed heavily, impeding its ability to bid for more jobs, while margins plunged and some of its assets were left idle following abrupt spending cuts in the industry globally. Since then, Sapura has sold some assets to strengthen its balance sheet.
For its first nine months, the company's net loss at 326.3 million ringgit widened from 292.88 million ringgit over the same period last year. However, revenue surged 73% year-on-year to 5.34 billion ringgit from 3.08 billion ringgit in the same nine-month last year.
Shares of Sapura Energy fell 1.9% to 0.265 ringgit apiece following the results announcement. The FTSE Bursa Malaysia KLCI meanwhile rose 0.2%.
-- Yimie Yong