KUALA LUMPUR, 29 MARCH 2021 - Deleum Berhad (“Deleum” or the “Group”), a provider of a diverse range of supporting specialised products and services to the oil and gas industry, posted creditable financial results for the year ended 31 December 2020 (FY2020), resulting in a declaration of a first interim dividend of 1.00 sen per ordinary share on its 401,553,500 ordinary shares for the FY2020, in line with the Group’s dividend policy. The dividend will be payable on 15 April 2021.

In FY2020, the global market which was hit by the unprecedented outbreak of Covid-19 pandemic, affected the global energy demand and oil prices adversely. Nevertheless, Deleum managed to deliver stronger operational performance by focusing on its operational efficiencies, cost and cash management initiatives and performance excellency across the Group. These focused enhanced measures undertaken in response to the unfavorable market conditions have resulted in improved profitability achieved by the Group in the second half of the financial year. For FY2020, Deleum has announced a profitable performance, with reported total revenue of RM592.1 million and profit before tax of RM27.3 million, as compared to a revenue of RM868.3 million and profit before tax of RM55.1 million reported in the corresponding period.

The Group’s profitability was aggravated by non-recurring one-off impairment charges on its operating assets totaling RM30.3 million, an impairment charge made on its long-term corporate other receivables of RM1.2 million and write-offs made on inventories of RM3.0 million. Excluding these impairment charges and write off expenses, the Group’s operating profit would have increased by 13.8% compared to the corresponding year, despite lower revenue recorded during the year but mitigated by improved margins and lower operating expenses incurred. 

Notwithstanding the above-mentioned challenges, the Group’s also continued to deliver a healthy balance sheet position with cash and bank balances standing strong at RM219.6 million against the previous year’s RM160.0 million.

Revenue for the Power and Machinery segment declined by 23.3%, to RM372.8 million against the corresponding year’s RM486.2 million. However, the combination of stronger margins from better sales composition and lower losses in foreign exchange differences helped cushion the performance of this business segment from the revenue reduction. The segment’s pre-tax results fell 9.6% to RM45.0 million from RM49.8 million in the corresponding year.

Oilfield Services’ revenue dropped by 24.1% to RM109.4 million against previous year’s RM144.2 million. It reported a loss of RM21.8 million as compared to a pre-tax profit of RM0.9 million attributable mainly due to one-off impairment charges of RM15.1 million, on its operating assets, provision for doubtful debts of RM1.0 million on trade receivables and write-offs of RM1.8 million and RM0.5 million on its inventory and other receivables, respectively.  

The Integrated Corrosion Solution segment reported a revenue of RM109.4 million, from RM237.3 million in the previous reporting year.  It was affected by lower jobs performed for both of its Maintenance, Construction and Modification and Sponge-Jet Blasting projects. Despite lower revenue and one-off impairment charges of RM15.2 million on its operating assets, the segment results reported a stronger profit of RM4.1 million compared to RM1.8 million previously.  This was on the back of higher project margins earned with better sales mix, lower foreseeable losses recognised and a decrease in the overhead costs recorded as a result of various cost savings initiatives undertaken in FY2020.

Looking ahead, Deleum anticipates a delicate recovery of demand in oil and gas as uncertainties over the impact of the Covid-19 pandemic remain. Supply remains in excess in the first quarter of 2021. Deleum will remain focus in preserving its sustainability and resilience to weather the continuing challenges and uncertainties for the remaining of the financial year.

Datuk Manharlal a/l Ratilal

Independent Non-Executive Director

Datuk Manharlal a/l Ratilal (Malaysian, aged 64, Male) was appointed to the Board on 1 October 2020. He was appointed as Senior Independent Non-Executive Director on 10 March 2022 and redesignated as Independent Non-Executive Director on 1 January 2023.

He holds a Master in Business Administration from Aston University in Birmingham, United Kingdom and a Bachelor of Arts (Honours) in Accountancy from the City of Birmingham Polytechnic (now known as Birmingham City University).

Datuk Manharlal was attached with RHB Investment Bank Berhad for 18 years, concentrating in corporate finance, where he was involved in advisory work in mergers and acquisitions, and the capital markets. He served as the Executive Vice President and Group Chief Financial Officer of PETRONAS, a member of the Board and Executive Leadership Team of PETRONAS, and sat on the boards of several subsidiaries of PETRONAS until his retirement in late 2018.

Other than the Company, he is also an Independent Non-Executive Director of Hong Leong Investment Bank Berhad, Hong Leong Bank Berhad and Genting Berhad.

He has no conflicts of interest with the Group and has no family relationship with any Director and/or major shareholder of the Group. He has not been convicted of any offences (other than traffic offences, if any) within the past five (5) years and has not been imposed of any public sanction or penalty by the relevant regulatory bodies during the year.

The COVID-19 pandemic coupled with the low oil environment saw Deleum Berhad’s (“Deleum” or the “Group”) half-yearly revenue decreased by 14.6% or RM49.7 million to RM290.0 million against the corresponding period of RM339.7 million. The decline was attributed to lower revenues from its Oilfield Services and Integrated Corrosion Solution segments which was mitigated by the stronger revenue contribution from the Power and Machinery segment.

Year-to-date, the Group recorded a loss before tax of RM8.8 million against a profit before tax of RM15.9 million in the corresponding period on the back of non-recurring one-off impairment charges and write-offs totalling RM15.6 million. Had the Group excluded these expenses, the Group would have recorded an operating profit for the reporting period.

Revenue for the Power and Machinery (P&M) segment increased by 11.1% or RM18.4 million to RM184.3 million and pre-tax profit was up by RM6.7 million or 60.7% as a result of higher contribution from turbines parts, valves and flow regulator services and machinery management systems coupled with lower operating expenses.

For the Oilfield Services (OS) segment, revenue for the half-year ended 30 June 2020 decreased by 28.1% to RM51.4 million (RM71.5 million previously). A loss of RM20.3 million was reported as opposed to the corresponding period’s profit of RM1.4 million. This was due primarily to the non-recurring one-off impairment charge on its slickline operating assets of RM10.6 million. Other contributing factors were provision for doubtful debts on trade receivables of RM1.0 million and write-offs on its inventory and other receivable of RM1.8 million and RM0.5 million respectively, in addition to its weaker operational performance.

Revenue for the Integrated Corrosion Solution (ICS) segment declined to RM53.9 million, representing a decrease of RM48.0 million or 47.1% as compared with RM101.9 million previously as a result of lower service maintenance activity levels performed for both of its Maintenance, Construction and Maintenance services and Sponge-Jet Blasting contracts. The segment reported a loss of RM5.6 million against a profit of RM1.4 million recorded in the previous corresponding period.

The oil and gas industry are facing an unprecedented time due to the Coronavirus (Covid-19) pandemic and low oil environment, which is expected to remain in the second half of 2020. Although there appears to be a gradual economic recovery, with various degree of relaxations in the lockdown and economic sectors re-opening, the industry is still facing a low oil environment due to uncertain demand.

To navigate through this challenging market and operating conditions, Deleum’s focus shall be towards building resilience, sustainability and consolidation of the businesses within the Group. The Group will continue to operate conservatively by focusing on both cost and cash management.

Deleum Berhad (“Deleum” or the “Group”), a provider of a diverse range of supporting specialised products and services to the oil and gas industry, reported a third quarter pre-tax profit of RM39.4 million.

The 21.9% increase or RM7.1 million for the nine months ended 30 September 2019 compared to the corresponding period of last year was achieved on the back of a solid growth in revenue across all segments. Revenue accumulatively rose to RM636.2 million, an increase of 50.3% or RM212.9 million, compared to the previous corresponding period.

For the third quarter of financial year ending 2019, Deleum recorded a 69.0% hike in revenue or RM121.1 million to RM296.5 million compared to the previous corresponding period on the back of higher sales across all segments. The Group also recorded a 64.8% increase in the quarterly pre-tax profit of RM23.5 million against the corresponding period last year, an increase of RM9.2 million.

For the segmental results in the third quarter, Power and Machinery (P&M) segment recorded a higher pre-tax profit of RM18.8 million, a rise of 89.2% or RM8.9 million compared to the corresponding quarter. This was in tandem with the significant increase in revenue achieved in the quarter, which amounted to 98.8% or RM89.3 million increase as compared to the corresponding quarter of the previous year.  The strong deliveries in exchange engines, higher valve and flow regulator services, increase in sales from retrofit projects, turbine parts, repair services, third party sales and lower net losses on MYR against USD foreign exchange have collectively contributed to the higher revenue and profits.

The Oilfield Services (OS) segment saw an improvement in its revenue by 4.9% or RM1.7 million to RM37.1 million against the corresponding quarter. This was mainly due to contribution from Gas Lift Valve services and better operating profits from Specialty Chemical and Well Stimulation as well as higher work orders from well intervention and enhancement services. The segment results fell to a profit of RM0.2 million compared against the corresponding quarter profit of RM3.6 million due to the downward pressure on margins from local slickline operations.

The Integrated Corrosion Solution (ICS) segment saw a RM3.4 million, or 1,949.1% jump, in its pre-tax profit against the corresponding quarter, on the back of higher work order deliveries and better sales mix with higher margins from the Sponge-Jet Blasting business. Revenue grew 60.6%, or RM30.0 million, to RM79.5 million as a result of the robust activity levels from on-going projects with strong momentum in sales growth from Sponge-Jet Blasting business via the renewal of the Pan Malaysia Painting and Blasting Contracts coupled with higher works performed on its Maintenance, Construction and Modification services contract.

For the remaining of the financial year ending 31 December 2019, Deleum expects the P&M segment to remain as the largest contributor to the profitability of the Group, ICS segment to maintain its financial performance while OS segment will focus on fulfilling all of its contractual requirements and working on margin improvement via stringent cost management.

Deleum will continue to remain cautious on its financial outlook by focusing on its business deliverables, cost efficiencies and effectiveness, and performance excellence across all segments.

Deleum Berhad (“Deleum” or “the Group”), a provider of diverse range of supporting specialised products and services to the oil and gas industry, reported a pre-tax profit to RM4.1 million for its first quarter ended March 31, 2020 (Q1FY2020), up 54.9% from the corresponding quarter in the previous year. This was achieved on the back of an 18.6% growth in revenue to RM151.2 million from RM127.5 million recorded in first quarter last year.

The Group’s profit attributable to shareholders, however, was shaved off by 23.3% to RM2.16 million (RM2.8 million in corresponding quarter). This was as a result of slowdown in the slickline activities in the West Malaysia region and downward pressure on margins in the Oilfield Services segment.

Revenue for its Power and Machinery (P&M) segment climbed 39.2% to RM97.3 million (RM69.9 million previously), on account of the increased demand in exchange engine, turbine parts and higher supply of local field service representatives.  Its pre-tax profit rose 29.5% to RM6.4 million with better margins earned from improved sales mix.

The Oilfield Services (OS) segment incurred a pre-tax loss of RM1.3 million (profit of RM4.0 million previously) with revenue falling by 12.8% to RM27.7 million (RM31.8 million previously). In addition to the slowdown in slickline activities in the West Malaysia region, its performance was also impacted by the decrease in commission income and a decline in activity level of jobs performed from well intervention and enhancement services. This was averted with stronger contribution from safety valve maintenance services, higher centraliser sales and increase in chemical revenue generated.

The Integrated Corrosion Solution (ICS) segment saw a slight increase of RM0.4 million in its revenue to RM26.1 million (RM25.7 million previously). Higher activity level from Maintenance, Construction and Modification services (MCM) contract contributed to the increased revenue with lower foreseeable losses in the project performance of the contract. The segment results recorded a lower loss by RM6.0 million to RM1.4 million in the current quarter attributed to improved sales mix.

Global oil prices have taken a plunge of 77% since January 2020 to a 21-year low of USD14 per barrel in end March 2020. The Coronavirus (Covid-19) pandemic has caused adverse impacts on economies worldwide. Reduced economic activities coupled with the oil price war have resulted in plummeting demand and supply overhang for oil.

Given this current highly challenging market and operating conditions, Deleum’s focus shall be towards sustainability and building resilience through strengthening integration efforts across all business segments.  This is expected to be achieved by leveraging on its human capital, financial strengths and resources as well as focusing on its cost and cash management.

(Labuan Engineering Centre)

(Research & Development Facility)