Deleum Berhad’s Q1 2025 Performance: A Resilient Start Amidst Market Shifts
Hello fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial report from Deleum Berhad for the first quarter ended 31 March 2025. This Malaysian oil and gas sector player has just released its unaudited condensed interim consolidated financial statements, and there’s plenty to unpack. From impressive profit growth to strategic acquisitions, Deleum appears to be navigating the dynamic market with a confident stride. Let’s explore the key takeaways that highlight their performance and future outlook.
Key Highlight: Deleum Berhad reported a significant 61.3% increase in Profit for the Period and a robust 34.2% rise in Profit Attributable to Equity Holders for Q1 2025 compared to the same period last year, alongside a strategic dividend payout for FY2024.
Unpacking the Core Financials: A Strong Q1 2025
Deleum Berhad kicked off the financial year with a commendable performance, demonstrating growth across key financial metrics. Let’s look at how the first quarter of 2025 stacks up against the corresponding period in 2024:
Q1 2025
- Revenue: RM179.4 million
- Operating Profit: RM27.3 million
- Profit Before Tax (PBT): RM28.3 million
- Profit for the Period: RM20.5 million
- Profit Attributable to Equity Holders: RM12.4 million
- Basic/Diluted Earnings Per Share (EPS): 3.09 sen
Q1 2024
- Revenue: RM161.4 million
- Operating Profit: RM15.4 million
- Profit Before Tax (PBT): RM17.3 million
- Profit for the Period: RM12.7 million
- Profit Attributable to Equity Holders: RM9.2 million
- Basic/Diluted Earnings Per Share (EPS): 2.30 sen
The Group’s revenue saw an 11.2% increase, rising by RM18.0 million to RM179.4 million. This uplift was driven by stronger contributions from both the Oilfield Integrated Services (OIS) and Power and Machinery (P&M) segments. More impressively, operating profit surged by 76.9%, and profit before tax climbed by 63.7%. This translated into a significant 61.3% jump in profit for the period and a 34.2% increase in profit attributable to equity holders.
Segmental Performance: The Engines of Growth
A closer look at the individual business units reveals the specific drivers behind Deleum’s robust performance:
Power and Machinery (P&M) Segment
The P&M segment reported a 2.4% increase in revenue to RM132.7 million. This was primarily due to higher sales from control and safety valves, flow regulator services, and a retrofit project. While these gains were partially offset by lower sales from exchange engines, the segment’s profit rose by 30.3% to RM28.5 million. This improvement was mainly due to a higher gross profit, though it was somewhat impacted by a fair value loss on forward foreign currency exchange contracts and higher operating expenses.
Oilfield Integrated Services (OIS) Segment
The OIS segment was a standout performer, experiencing a substantial 46.7% increase in revenue to RM46.6 million. This growth was fueled by higher business activities from Maintenance, Construction and Modification (MCM) projects, slickline services in East Malaysia, and specialty chemicals and well stimulation services. Importantly, the segment turned a loss of RM3.4 million in Q1 2024 into a profit of RM1.9 million in the current quarter, largely attributed to higher contributions and a net foreign exchange gain.
Quarter-on-Quarter Snapshot: Q1 2025 vs Q4 2024
Comparing the current quarter with the immediate preceding quarter (Q4 2024) provides insights into recent trends:
| Metric | Q1 2025 (RM’000) | Q4 2024 (RM’000) | Variance (RM’000) | Variance (%) |
|---|---|---|---|---|
| Group Revenue | 179,421 | 250,936 | (71,515) | (28.5) |
| Operating Profit | 27,278 | 31,861 | (4,583) | (14.4) |
| Profit Attributable to Equity Holders | 12,405 | 17,463 | (5,058) | (29.0) |
While the overall Group revenue and profit attributable to equity holders saw a decrease compared to the immediate preceding quarter, this was mainly due to lower operating results in the P&M segment and lower net foreign exchange gain. However, the OIS segment showed improved operating results, benefiting from the absence of certain allowances and impairments recorded in the previous quarter, along with a better foreign exchange position.
Financial Health and Cash Flow Dynamics
Deleum’s balance sheet and cash flow statements reflect strategic adjustments and healthy operational cash generation. Total assets decreased by RM44.4 million (6.1%) to RM688.6 million, primarily due to lower inventory levels from the delivery of exchange engines, reduced contract assets upon billing, and dividend payments. Similarly, total liabilities decreased by RM39.7 million, largely driven by lower trade payables, although this was partly offset by an increase in contract liabilities and borrowings.
Despite a lower cash and bank balance at RM146.0 million, the Group’s overall liquidity, including investment securities, actually improved by RM18.7 million to RM218.0 million. This highlights a prudent management of funds, with RM72.0 million placed in short-term financial assets. Deleum generated a healthy RM46.0 million in positive cash flow from operating activities, showcasing efficient inventory management and strong collections from receivables. However, investing activities saw a net outflow of RM73.3 million, mainly due to investments in financial assets and capital expenditure, while financing activities recorded a net outflow of RM26.0 million, predominantly due to dividend payments.
Strategic Outlook and Future Prospects
Deleum remains confident about its outlook for 2025, despite the prevailing market volatility and trade-related uncertainties. This optimism is underpinned by the Group’s resilient core business, which continues to be driven by operating expenditure-related activities in the upstream oil and gas sector, as well as ongoing maintenance requirements across the industry.
A significant highlight is Deleum’s current orderbook, standing strong at RM1.58 billion. This provides excellent earnings visibility and a robust project pipeline, expected to keep the Group actively engaged throughout the year. Furthermore, the proposed acquisition of a 70% stake in PT OSA Industries Indonesia is anticipated to be completed in the second quarter of this year, with contributions expected to start flowing into the Group’s financial performance in the second half of the year. This strategic move is set to further expand Deleum’s regional footprint and diversify its revenue streams.
Both the Power and Machinery and Oilfield Integrated Services segments are projected to perform positively this year, buoyed by their healthy order books. Deleum’s management expresses optimism for the remainder of the financial year, indicating a proactive approach to market opportunities.
Summary and
Deleum Berhad has delivered a strong first quarter for 2025, showcasing significant profit growth driven by robust performances in both its Power and Machinery and Oilfield Integrated Services segments. The Group’s strategic focus on operational expenditure-related activities within the oil and gas sector, coupled with a substantial order book and an impending acquisition, positions it for continued engagement and potential growth. While the overall financial position remains solid with healthy cash generation from operations, it’s important for investors to consider the broader context.
Key points from the report that warrant attention include:
- Strong Operational Performance: Both key segments, P&M and OIS, contributed positively to revenue and profit growth, with OIS showing a notable turnaround from a loss to a profit.
- Robust Orderbook: The RM1.58 billion orderbook provides clear earnings visibility and suggests sustained activity throughout the year.
- Strategic Expansion: The acquisition of PT OSA Industries Indonesia is a significant step towards regional expansion and diversification, expected to contribute positively in the latter half of the year.
- Dividend Payout: The declaration and payment of a second interim dividend for FY2024 reflects the company’s commitment to returning value to shareholders.
- Litigation Considerations: The ongoing material litigation involving a subsidiary, although partially settled, still requires attention as the assessment of damages hearing is scheduled for August 2025.
- Joint Venture and Associate Contributions: Lower contributions from the joint venture and associate in the current quarter due to specific operational factors in those entities.
Deleum’s management has expressed confidence in its outlook for 2025, emphasizing the resilience of its core business and strategic initiatives. Investors should continue to monitor the execution of their growth strategies, especially the integration and performance of the new acquisition, and the resolution of the pending litigation.
Your Thoughts?
Deleum Berhad’s Q1 2025 report paints a picture of a company with strong operational momentum and clear strategic direction. The significant increase in profits and the substantial order book are certainly encouraging. However, the dynamics of the oil and gas sector are always evolving, and the impact of the upcoming acquisition will be crucial to watch.
What are your thoughts on Deleum’s performance this quarter? Do you believe their strategy for regional expansion and focus on core O&G services will continue to drive growth in the coming quarters? Share your insights and perspectives in the comments section below!
For more detailed analysis and updates on Malaysian companies, be sure to check out our other recent blog posts.
