OKOTOKS, AB — Mullen Group Ltd. has reported a huge drop in its second quarter profit as business in Canada’s energy industry has also sunk.
The trucking and related oilfield services transportation provider said net income totaled $0.9 million or $0.01 per share, a decrease 96.5 percent, compared to the same time a year ago.
Consolidated revenue declined 9.1 percent, to $284.8 million, compared to $313.4 million in 2014, due to a $64.7 million decline in revenue in the company’s oilfield services segment but was offset by a $36.2 million increase in its trucking and logistics business.
“Our trucking/logistics segment continues to produce positive results, including record operating income of $29.4 million and higher margins. I am most pleased with these results given the state of the economy, which continues to underperform,” said Murray K. Mullen, chairman and CEO. “Unfortunately, our overall results continue to be negatively impacted by the slowdown in capital spending and drilling activity by the oil and natural gas industry in western Canada, which remains under tremendous stress due to low oil and natural gas prices.”
He said the current market is “very challenging” but noted the company has adjusted to minimize the affects of the slowdown in its oilfield related business.
Mullen’s oilfield services segment continued to be hit by steep reductions in capital investment, new projects and drilling activity by the oil and natural gas industry in western Canada, according to the company.
As a result, it said virtually all operations within this segment experienced a decline in revenue. Specifically, the decrease was due to a reduction in revenue involving in the transportation of fluids and servicing of wells, due of low customer demand, intense competition and pricing pressures. Revenue also decreased due to a reduction in business from Mullen’s business most directly tied to oil and natural gas drilling activity in western Canada and from lower demand for dewatering services.
Mullen Group’s consolidated revenue in the first six months of 2015 decreased by 14.3 percent to $622 million compared to $725.4 million in 2014.
Net income in the first six months of 2015 fell to $3.7 million compared to $61.9 million in 2014.
“These are very difficult times for anyone involved in the oil and natural gas industry, which I expect will continue until oil and natural gas prices recover from current levels. The timing of the recovery remains uncertain, however we have experienced cyclical downturns many times and will manage our business appropriately,” said Mr. Mullen. “Fortunately, we strengthened our balance sheet last year and completed some timely acquisitions focused on the trucking and logistics sector, providing at least some positive in an otherwise pretty difficult market environment. We are well positioned to take advantage of future opportunities that will inevitably arise.”
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