KUALA LUMPUR, 24 AUGUST 2022 - Deleum Bhd, a provider of a diverse range of supporting specialised products and services to the oil and gas industry, recorded a pre-tax profit of RM24.5million for the half year ended 30 June 2022, an increase of 82.2% from the corresponding period.
Group revenue increased marginally to RM229.1 million against the corresponding period mainly contributed by its Oilfield Services and Integrated Corrosion Solution segments but offset by lower revenue from the Power and Machinery segment.
Profit attributable to equity holders increased more than double to RM16.6 million from RM7.2 million previously. This was attributable to the better operating performance by the Oilfield Services segment on account of improvement in operating margins, reversal of impairment made for a trade receivable of RM2.6 million and a gain recorded on disposal of its plant and equipment of RM1.6 million.
The increase in group profit is also due to the better results achieved by the Integrated Corrosion Solutions segment with higher revenue and lower operating expenses reported.
The Group’s cash and bank balances has further strengthened to RM203.7 million with positive cash inflow generated from its operating activities and investing activities respectively for the financial period ended 30 June 2022. The increase in cash flow was partially offset by repayment of bank borrowings of RM14.2 million and dividend payment of RM7.1 million made to its shareholders and non-controlling interests.
Oilfield Services Pre-tax
The OS segment recorded a pre-tax profit of RM7.2 million for the current half-year compared with a loss of RM0.3 million previously.
This improvement came on the back of higher revenue of RM62.6 million (RM54.0 million in previous corresponding half year).
The second quarter saw higher activities from its slickline services in East and West Malaysia regions, well intervention and enhancement services, chemical sales, and spill over jobs from the gas lift valve contract which contributed to this higher revenue.
Integrated Corrosion Solution
Higher maintenance activity levels for its Sponge-Jet Blasting (“SPJ”) business in Indonesia and the Maintenance, Construction and Modification services (“MCM”) project contributed to the 41.7% increase in revenue to RM26.9 million for the ICS segment in the cumulative two quarters.
The higher revenue achieved coupled with lower operating expenses have turnaround the segment results from a loss of RM3.5 million in corresponding period to a strong pre-tax profit of RM2.4 million.
Power and Machinery
Revenue in the P&M segment fell by 10.5% to RM139.4 million. Pre-tax profit was also lower at RM13.9 million, a dip of 19.4% from RM17.2 million previously.
The performance of this segment was affected by lower contribution from the valves and flow regulators services and third-party sales, but partially mitigated by the favourable movement in foreign currency contract differences with a lower net loss as compared to previous year.
Deleum opined that the oil and gas industry is expected to remain volatile on the uptrend due to supply chain and markets challenges in Europe and Asia as a consequence of the Russia/Ukraine conflict.
While prices were settling down compared to the first quarter, activity levels are still expected to remain healthy, and the industry services sector is expected to benefit from this.
The Group will continue with its focus on delivering its services in accordance with its plans and strategy. Inflation will be of concern, and Deleum will be mindful with resource management while seeking to expand the new product line acquired in the first quarter, and retaining talent in the organisation.