KUALA LUMPUR, 29 NOVEMBER 2021 - Deleum Berhad’s (“Deleum” or the “Group”), a provider of a diverse range of supporting specialised products and services to the oil and gas industry, reported a pre-tax profit of RM14.7 million in the nine months ended 30 September 2021 (“9MFY2021”), a marginal decline from nine months ended 30 Septembers 2020’s (“9MFY2020”) RM14.9 million.
The 9MFY2021’s result was commendable despite recording a lower revenue of RM366.5 million compared to last year’s corresponding period of RM432.2 million. Improvement in results in 9MFY2021 compared to 9MFY2020 was supported by better operating performance recorded from the Oilfield Services (“OS”) segment and the absence of impairment charges.
Turnover for the quarter ended 30 September 2021 (“Q3FY2021”) fell by 4.5% year-on-year (“YoY”) to RM137.5 million against the quarter ended 30 September 2020’s (“Q3FY2020”) RM144.0 million due to the decline in business activities reported by its OS and Integrated Corrosion Solution (“ICS”) segments. Q3FY2021’s pre-tax profit fell 94.4% compared to Q3FY2020 due to weaker operating performance across all business units.
The Group’s total cash position including investment securities remained healthy at RM202.2 million as at 30 September 2021. Gearing ratio was low at 0.1 times at the end of the period under review.
Segmental Review
Power and Machinery (P&M)
The P&M segment turned in better performance in Q3FY2021 with an 18.6% increase in revenue to RM97.5 million as a result of improved overall sales activities when compared to Q3FY2020. However, unfavourable change in sales mix with downward pressure on margins caused pre-tax profit to be 49.8% lower at RM7.4 million.
However, the segment’s 9MFY2021 revenue decreased by 4.4% to RM253.2 million against last year’s corresponding period of RM264.8 million. Unfavourable change in sales mix and pressure on profit margins impacted pre-tax profit, falling 27.7% to RM24.6 million.
Oilfield Services (“OS”)
The segment ended Q3FY2021 with lower revenue of RM21.3 million and a pre-tax loss of RM7.4 million compared to last year’s corresponding period due to lower slickline, well intervention and enhancement and gas lift valve services and chemical sales. This segment was also impacted by provisions made on its slow-moving stocks.
The segment’s revenue decreased by 8.6% to RM75.2 million in 9MFY2021 compared to 9MFY2020 of RM82.3 million. It reported a pre-tax loss of RM7.7 million -caused by higher provisions and write-offs made on its stocks.
Integrated Corrosion Solution (“ICS”)
The ICS segment revenue fell 39.6% YoY to RM18.6 million in Q3FY2021, incurring a loss of RM0.4 million in line with the fall in revenue. Lower contract orders and job deliveries due to the slowdown in maintenance activity levels contributed to the lower revenue and profit of the said quarter.
Its 9MFY2021 revenue declined by 55.6% to RM37.6 million from RM84.8 million in 9MFY2020 following the lower maintenance services activity performed for both its Maintenance, Construction & Modification (“MCM”) and local Sponge-Jet operations.
Prospects
Looking forward, businesses activities are expected to pick up in the upcoming quarters as travel restrictions and quarantine requirements ease, on top of the forecasted sustainability of the high crude oil price level in the industry. The Group will continue to focus on fulfilling orders that were affected by the movement restriction control imposed by the government as well as securing new orders and jobs.