The pre-tax profit is 26.0% lower than corresponding period in 2014, considering the challenging operating environment in the oil and gas sector which led to lower contributions from its business segments.
The Power and Machinery (P&M) segment recorded a lower pre-tax profit of RM44.6 million for the nine months ended 30 September 2015 as compared to RM48.7 million in the corresponding period as a result of deferred projects due to customers’ reduced spending in response to the low crude oil prices.
The Oilfield Services segment logged a higher revenue of RM101.0 million for the nine months ended 30 September 2015 as compared to RM93.1 million in the corresponding period. However, despite the increase in revenue, the segment recorded a lower segment result of RM7.6 million in the current period due to lower margins, higher foreign exchange loss and interest expenses on borrowings for the acquisition of slickline equipment.
The Integrated Corrosion Solution (ICS) segmentreported a higher revenue of RM31.4 million in the current period, a 196.7% or RM20.8 million increased as compared to the corresponding period on the back of the Pan Malaysia Blasting contract. Notwithstanding this, the ICS segment still recorded a marginal segment loss of RM0.4 million due to higher operating costs to support the increased activities.
Deleum’s Group Managing Director, Nan Yusri bin Nan Rahimy, said: “The Group experienced a sharp contraction in activity levels as the impact of cut backs by customers take hold. Slower project rollouts, delays in tenders, postponement of new projects and renegotiation of contracts translated into lower profit margins.”
“While the Group’s activities and long-term contracts secured to date will sustain ongoing revenue generating activities, overall demand for products and services are expected to be subdued. Against this backdrop, performance will continue to come under pressure. The Board and management are monitoring the situation closely by moderating capital expenditures, reducing working capital and containing cost to conserve cash.”