- Group pre-tax profit for 2Q23 up 45% and net profit up 15%, on 49% rise in revenue
- Power and Machinery segment profit before tax surges 140% to RM17.3 million in 2Q23, supported by encouraging capital spending in Oil and Gas sector
- Focus on new area of growth for Oilfield Services segment sees multiple new solid control contracts aggregating RM64.0 million secured so far
KUALA LUMPUR, 29 AUGUST 2023 - Leading oil & gas (O&G) services provider Deleum Berhad (“Deleum” or the “Group”), recorded an increase of 45% in group pre-tax profit to RM18.3 million and 15% in group net profit to RM9.7 million in the second quarter ended 30 June 2023 (2Q23), from RM12.7 million and RM8.5 million respectively in the same period last year, primarily due to the significant contribution from its Power and Machinery (P&M) segment.
P&M segment remained the Group’s key growth driver in 2Q23 financial performance. The substantial boost in P&M segment revenue more than offset the reduced contributions from both Oilfield Services (OS) and Integrated Corrosion Solution (ICS) segments, effectively increasing 2Q23 group revenue by 49% to RM188.1 million from RM126.3 million in the previous year.
For the six months ended 30 June 2023 (1H23), the Group’s pre-tax profit increased by 37% from RM24.5 million to RM33.6 million. Accordingly, net profit rose 14% to RM18.9 million from RM16.6 million in the previous year, while revenue increased 36% to RM311.5 million from RM229.1 million.
“We are excited about our strong start of the first half of the year, brought about by our P & M segment. Our momentum is expected to maintain, supported by the encouraging capital spending in the O & G sector. Looking ahead to the second half of the year, we anticipate that the O&G sector will remain resilient, on the back of increased exploration and production activities. We are optimistic that 2023 would be a good year for Deleum barring any unforeseen circumstances, as the Group strives to find new opportunities for growth in our core businesses that will bring value to our shareholders. We are encouraged with the results of the successful awards of new contracts for our solid control business with an estimated aggregate contract value of RM64.0 million from exploration and production clients in recent months. We anticipate this business to grow further in the future as a new growth area for the OS segment.” Rao Abdullah Group Chief Executive Officer, Deleum Berhad
Power and Machinery (P&M) Segment
Revenue from the P&M segment doubled up to RM155.3 million in 2Q23, from RM77.7 million in the prior year. Increased sales value and quantity of exchange engines delivered, sales of turbine parts and repairs, field service representative call out activities, and control and safety valves and flow regulator services - all contributed to an upsurge in revenue. Following that, segment profit soared by 140% to RM17.3 million, up from RM7.2 million in the previous year.
In 1H23, the segment reported revenue and profit before tax of RM253.0 million and RM33.7 million respectively, compared to RM139.4 million and RM13.9 million in the previous year. The better performance was attributed to higher gross profit, foreign exchange gain, and fair value gain on forward foreign currency exchange contracts.
The segment continues to be the Group’s largest revenue contributor in 1H23, accounting for 81% of total group revenue of RM311.5 million.
Oilfield Services (OS) Segment
OS segment revenue declined 9% to RM31.6 million in 2Q23 from RM34.6 million a year ago due to lower business activities in slickline services, gas lift valve services, and asset integrated solutions. Along with lower revenue, segment profit dropped 36% to RM2.2 million, from RM3.5 million previously.
Cumulatively, the OS segment posted a marginal profit before tax of RM3,000 for 1H23, on revenue of RM54.4 million. The decrease in both revenue and profit was caused by reduced revenue reported and lower reversal of impairment on trade receivable.
Integrated Corrosion Solution (ICS) Segment
During 2Q23, ICS segment recorded a lower revenue of RM1.0 million, versus RM14.0 million previously, predominantly due to lower maintenance activities from the alternative blasting and painting business in Indonesia and Maintenance, Construction and Modification projects. This has resulted in the loss of RM1.6 million for the segment.
Subsequently, for 1H23, ICS segment registered a lower revenue and loss before tax of RM3.9 million and RM1.5 million, respectively.
Deleum has maintained a robust balance sheet and continues to achieve healthy sales performance to power its core businesses. As at the end of 2Q23, the Group’s net cash position has further strengthened, with cash and bank balances of RM222.8 million exceeding total borrowings of RM2.8 million, compared to RM178.0 million and RM8.8 million on 31 December 2022 respectively. Shareholders’ equity increased to RM394.5 million as of 30 June 2023, up from RM388.8 million as of 31 December 2022.
The Group’s sturdy orderbook currently stands at RM537.9 million, which consists of works and equipment mostly to be delivered within 12 months.
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About Deleum Bhd
Deleum Berhad is an investment holding company and through its subsidiaries, provides a diverse range of supporting specialised products and services to the oil and gas industry, particularly in the exploration and production sector. Its range of products and services is distinguished according to its three core business segments – Power and Machinery, Oilfield Services and Integrated Corrosion Solutions. Deleum is listed on the Main Market of Bursa Malaysia.
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