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.