Okotoks-based Mullen Group Ltd., one of Canada’s largest suppliers of trucking and logistics services, reported on Thursday that it had a net loss of $81.1 million in its fourth quarter and $43.8 million for 2018.
The company also offers specialized transportation services to the oil and natural gas industry in Canada.
In reporting its financial results, the company said revenue for the quarter of $333.3 million was up 12.6 per cent from the previous year while 2018 revenue rose by 10.7 per cent to $1.26 billion.
In the quarter, operating income before depreciation and amortization was $51.7 million, an increase of 12.4 per cent from the previous year. On an annual basis, operating income before depreciation and amortization rose by 9.8 per cent to $189 million.
“I am pleased to report that our fourth quarter results from an operating perspective were up year over year despite some significant challenges associated with the market meltdown in late 2018,” said Murray K. Mullen, chairman and chief executive officer of the company, in a new release. “We definitely saw the freight demand slow in the quarter as business adjusted to credit tightening.
“The major impact, however, was felt by our oilfield services segment, particularly those business units tied to drilling activity. The swift declines in crude oil pricing along with a ‘blow-out’ in the price for Canadian crude oil virtually brought drilling activity to a halt in the fourth quarter as producers adjusted spending plans to align with cash flow. Overall, however, our financial results from operations were up year over year with consolidated revenue up by 12.6 per cent and operating profitability by 12.4 per cent, due to acquisitions and the strong performance of a few business units.
“The most troubling aspect of the fourth quarter market meltdown is the impact that events like this can have on the investment cycle. The oil and natural gas industry is a case in point. The industry, especially here in Canada, has been dealing with a multitude of issues that have restricted the ability of most producers to raise new capital. As such, when commodity prices collapse, as they did in the fourth quarter, cash flows are negatively impacted forcing producers to reduce spending and investment decisions. The response this time was fast and will be devastating on the service industry in Canada.
“It is for this reason that we concluded that several of our business units in the oilfield services segment would be negatively impacted in 2019, resulting in an impairment of $100 million to goodwill, a non-cash event, negatively affecting earnings for the fourth quarter and full year. Decisions like this are never easy, however, it does reiterate that the prospects for the oilfield service industry in Canada are troubling at best. And unfortunately it is not just shareholders that will be impacted. A lot of really dedicated and hardworking people and their families are victims of the slowdown in Canada’s oil and natural gas industry.”
– Mario Toneguzzi for Calgary’s Business