KUALA LUMPUR, 24 AUGUST 2021 - Deleum Berhad’s (“Deleum” or the “Group”), a provider of a diverse range of supporting specialised products and services to the oil and gas industry, posted improved half-year results, turning around to record a profit of RM7.2 million against a loss of RM9.0 million recorded in the corresponding period.
The stronger financial performance for the 6-month period ended 30 June 2021 was despite a 20.3 per cent lower revenue of RM231.1 million as compared to RM290.0 million of the corresponding period. The lower revenue was on the account of depressed revenue recorded by the Power and Machinery (P&M) and Integrated Corrosion Solution (ICS) segments.
The Group’s profits attributable to equity holders of the Company swung back to a profit due to stronger operating margins recorded on the back of a positive change in sales mix of products and services, lower write-offs made on inventories and other receivables from the Oilfield Services segment, favourable movement in foreign exchange differences as well as non-occurrence of the one-off impairment charges on the slickline operating assets and a corporate long-term other receivable of RM10.6 million and RM1.7 million respectively reported in the corresponding period last year.
Revenue of the P&M segment decreased by 14.4% to RM157.9 million and profit before tax fell by 10.1 per cent to RM16.0 million as a result of weaker sales on turbines parts and valves and flow regulator services. However, the favourable movement in Ringgit against US Dollar chalked up a net gain of RM1.2 million (loss of RM1.8 million in the corresponding period), partially cushioning the effect of the weaker sales.
For the Oilfield Services (OS) segment, revenue increased by 4.9% to RM54.0 million and segment results too improved with a lower loss of RM328,000 (loss of RM20.3 million in the corresponding period). This was due to the improved revenue recorded following higher slickline asset utilisation. The lower loss during the period under review was in line with the higher revenue, improved operating margins, absence of inventory write-offs as well as lower impairment made on its trade receivables and contract assets. The corresponding half year segment results were adversely impacted by the non-recurring impairment charge made on its slickline operating assets of RM10.6 million.
Revenue for the ICS segment declined 64.8 per cent to RM19.0 million with lower activity levels in maintenance services for both of its Maintenance, Construction and Modification and local Sponge-Jet Blasting operations. Higher operating margins coupled with lower overhead expenses cushioned the set back of decline in revenue for the segment to incur a lower loss before tax at RM3.5 million compared to RM5.6 million previously.
Deleum Group predominantly operates in the Malaysian market. With the higher vaccination rate, it expects less encumbrances in the quarantine requirements for the offshore crew. This will improve the utilisation of the Group’s manpower and equipment. The current oil price level may also bring positive impact to the Group. Even though the December monsoon season may result in potential decrease in activities, Deleum is cautiously optimistic in its operating performance for the remainder of the year.