KUALA LUMPUR (Nov 19): Dialog Group Bhd's (KL:DIALOG) net profit in the first quarter ended Sept 30, 2024 (1QFY2025) grew 14.2% to RM150.97 million, from RM132.17 million a year ago, despite lower revenue.

Its profit was mainly driven by better performance by its midstream business, amid increased revenue from higher tank storage occupancy and tariffs, coupled with higher share of profits from joint ventures (JVs) and associates.

Shares of profits from Dialog's JVs and associates increased 25.33% to RM117.74 million, from RM93.94 million a year ago, according to the company’s filing to Bursa Malaysia. 

The better quarterly profit was also helped by lower operating expenses (opex), which fell 18% to RM587.84 million, from RM717.06 million previously. 

The group’s earnings per share for 1QFY2025 increased to 2.68 sen from 2.34 sen in 1QFY2024.

Quarterly revenue, however, dropped 18.7% at RM634.45 million, compared with RM780.45 million previously. The revenue is the lowest since 3QFY2022, when it reported a revenue of RM593.43 million. 

It did not declare any dividend for 3QFY2024.

The upstream business continued to deliver a strong production volume from its assets. However, the segment generated lower revenue and profits contributions in 1QFY2025, due to lower realised oil prices.

The downstream business, meanwhile, progressed to complete various engineering, procurement, construction & commissioning (EPCC) and plant maintenance projects. 

"As reported in the previous quarters, these projects experienced losses due to various challenges brought on by geopolitical tensions, inflationary pressures, and supply chain disruption which drove up material prices and labour costs. As some of these projects are in the pre-commissioning and commissioning stages, the losses reported by the downstream activities for the current financial quarter were reduced," it said.  

Its international operation saw lower revenue and profits achieved in the quarter under review due to reduced business activities.

In addition, as the group sold its entire 60% equity interest in Dialog Jubail Supply Base (DJSB) in August 2024, the results of DJSB were not consolidated at the group level in 1QFY2025.

Looking ahead, Dialog said its business model is well-structured to manage and sustain through periods of economic uncertainty, oil price volatility and currency movements

Dialog said the group will continue to grow its existing upstream business through the development and rejuvenation of oil and gas fields.

Dialog, being the second-largest independent terminal owner cum operator in Southeast Asia, said it will continue to invest in phased capacity expansions for dedicated long-term customers across its midstream terminals business portfolio.

For its downstream business, Dialog said it will conduct thorough risk assessments for new projects against the backdrop of market uncertainties and challenges, including geopolitical tensions, inflationary pressures, supply chain disruptions, and increasing material and labour costs.  

“As the economic environment is expected to remain challenging in the short to medium term, we will continue to build and strengthen our competencies by investing in and upskilling our workforce to ensure we remain efficient and competitive.

“Alongside investing in our people, we are also stepping up our digital transformation initiatives which will reinforce our competitiveness,” it added.

The group is optimistic of delivering positive performance in the financial year ending June 30, 2025 (FY2025).

Shares in Dialog increased four sen to close at RM1.99 on Tuesday, giving the group a market capitalisation of RM11.24 billion.