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.