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.