Sapura Energy Set for FY26 Earnings Rebound Following RM478 Million Loss in Q1

Sapura Energy Berhad is poised for a potential turnaround in the second quarter of its 2026 financial year (2QFY26), following a challenging start to FY26 marked by significant losses and project headwinds. BIMB Research, while maintaining a “hold” call on the stock, has revised its full-year earnings forecast downward by 18% in light of the group’s weaker-than-expected performance in the first quarter ended 30 April 2025 (1QFY26).

The oil and gas group recorded a net loss of RM477.96 million in 1QFY26, a sharp reversal from a net profit of RM82.13 million during the corresponding period a year earlier. Revenue also declined markedly to RM801.37 million from RM1.18 billion previously, largely due to operational difficulties in delivering on an engineering, procurement, construction and installation (EPCI) contract in Angola.

The engineering and construction segment bore the brunt of these issues, incurring RM304 million in foreseeable losses tied to the Angola project. Sapura’s order book also shrank, with its subsidiaries’ secured contracts falling to RM7.9 billion (from RM8.5 billion in 4QFY25), while joint ventures saw a decline to RM4.8 billion (from RM5.5 billion), reflecting slower replenishment.

Drilling operations were similarly impacted, with asset utilisation weakening. Total drilling days dropped to 604 in 1QFY26, compared to 750 in 1QFY25 and 729 in 4QFY25, amid contract transitions for the T-17 and T-18 rigs. In contrast, the operations and maintenance division remained profitable, generating a pre-tax profit of RM20 million despite softer activity levels.

Looking ahead, BIMB Research anticipates a recovery beginning in 2QFY26, underpinned by improving execution of the Angola project, which is slated for completion by December 2025. Enhanced rig utilisation and higher daily charter rates, as new contracts come into effect, are also expected to support earnings rebound.

While the research house was caught off guard by another cost overrun in 1QFY26, Sapura management has guided that similar instances are not anticipated for the remainder of the financial year.

Separately, the company received a key regulatory nod, as Bursa Malaysia approved its proposed regularisation plan. However, further regulatory milestones remain, including obtaining a waiver from the Securities Commission that would exempt Sapura from launching a mandatory general offer. This waiver is essential for the execution of its broader debt restructuring plan, which targets completion by August 2025.

BIMB Research believes the group could potentially exit its PN17 status by the second half of 2026, subject to the successful delivery of two consecutive quarters of profitability.

UOB Kay Hian Research (UOBKH Research) echoed this cautiously optimistic outlook, noting that Bursa’s green light signals the beginning of Sapura’s genuine recovery. The company is intensifying efforts to meet its restructuring deadline of August 2025, with a long-stop date set for 11 March 2026.

As part of the restructuring initiative, Sapura plans to slash its total debt burden from RM10.8 billion to RM5.6 billion. This reclassified “sustainable debt” is expected to be equally allocated between its Brazilian joint venture, focused on pipelaying support vessels, and its drilling division. Repayment schedules are projected to range between RM200 million and RM700 million.

-The Star

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