Deleum Bhd (“Deleum” or the “Group”), a provider of a diverse range of supporting specialised products and services to the oil and gas industry, reported a pre-tax profit of RM55.0 million for the financial year ended December 31, 2019 (FY2019), an increase of 29.4% from the RM42.5 million recorded in the corresponding year.
The Group’s revenue for FY2019 was higher by 39.2%, or RM244.6 million, to RM868.3 million compared to RM623.7 million in the previous financial year on the back of an increase in revenue recorded across all reportable segments. On a quarter-to-quarter basis, the Group’s pre-tax profit had improved by 53.1%, or RM5.4 million to RM15.7 million against RM10.2 million in the corresponding period.
Deleum’s Power and Machinery (P&M) segment saw a 38.2% hike to RM49.8 million in its pre-tax profit against the corresponding year. This was driven by the robust demand for valves and flow regulators services, turbine parts, exchange engine, third-party sales and sales in retrofit projects. The results, however, were impacted by the lower operating margins due to higher operational costs incurred in addition to wider losses in the re-translation of foreign exchange differences.
Notwithstanding the higher revenue reported, the Oilfield Services (OS) segment recorded a lower pre-tax profit of RM0.9 million against the corresponding year’s profit of RM14.4 million underpinned by the downward pressure on margins and higher costs to serve due to higher equipment rental costs incurred.
The Group’s Integrated Corrosion Solution (ICS) segment turned around its results to record a pre-tax profit of RM1.8 million, representing an increase of RM8.4 million or 128.4%, against a loss of RM6.5 million in the previous corresponding year. This was attributed to stronger activity levels and work order deliveries from both its Maintenance, Construction and Modification (MCM) and Pan Malaysia Painting and Blasting (PMPBC) contracts due to margin improvements with better sales mix as well as absence of high expediting costs incurred for the closure of PMPBC contract during the last corresponding year.
The Group has declared a second interim single tier dividend of 3.00 sen per ordinary share, payable to shareholders on 26 March 2020. Combined with its first interim single tier dividend of 1.40 sen per ordinary share which was paid out on 20 September 2019, this will record a total dividend of 4.40 sen per ordinary share for FY2019. Gearing up for the new financial year, Deleum remains focus on its key strategic plans to ensure business sustainability and growth amidst all the challenges and uncertainties in the industry. The P&M segment remained as the highest contributor to the Group’s profitability. The segment is continuing its effort to further enhance its performance in addition to expanding its businesses for the new financial year 2020. The OS segment has managed to fulfil the required contractual obligations in the financial year 2019 despite being impacted by the mobilisation cost of its newly secured slickline contracts at the end of the previous financial year.
Moving forward, the segment is expected to contribute positively, whilst maintaining its performance quality and improving on its profitability for the new financial year. Meanwhile, the ICS segment has turnaround to report a profit in the financial year ended 2019. In 2020, the segment will continue with its initiatives and measures to further strengthen its financial performance and operating efficiencies.