KUALA LUMPUR (Aug 29): Hibiscus Petroleum Bhd (KL:HIBISCS) is maintaining its dividend guidance of 8-10 sen for its upcoming 2026 financial year, even after ending its 2025 with a nearly 75% drop in annual profit, following a 32% decline in its fourth-quarter net profit.

The group said the dividend commitment is a reflection of management's confidence in sustaining shareholder returns, as it remains bullish on the outlook for the sector. It plans to produce 35,000 barrels of oil equivalent per day (boe/day) in FY2026, underpinned by identified growth opportunities, surpassing the record 26,462 boe/day it achieved for FY2025, its bourse filing showed.

The oil and gas exploration and production firm declared a fifth interim dividend of half a sen per share, to be paid on Oct 23. It also proposed a final dividend of half a sen per share for FY2025, subject to approvals, which will bring its dividend payout for FY2025 to nine sen per share — its highest annual payout — up from 8.5 sen per share for FY2024.

The group's net profit for the fourth quarter ended June 30, 2025 (4QFY2025) dropped to RM74.61 million from RM108.68 million 4QFY2024. Revenue fell 14.71% to RM629.51 million from RM738.05 million.

The decline was due to lower production volumes and crude oil prices in Peninsular Malaysia and Sabah, as well as higher impairment charges, expenses and finance costs. These were partly offset by a tax credit of RM38.35 million, as opposed to a tax expense of RM52.09 million last year.

For the full FY2025, the group saw its net profit drop to RM117.5 million from RM467.12 million, as revenue fell 14.1% to RM2.33 billion from RM2.72 billion. This is despite a record volume of oil, condensate and gas sold during the year, up 14% from FY2024.

The lower annual earnings were mainly due to softer average oil and gas selling prices, weaker US dollar, and a one-off non-cash deferred tax liability charge for energy profits levy (EPL) in the UK. Excluding this EPL effect, the group said its normalised profit after tax stood at RM260.6 million.

The group, meanwhile, said it remains on track to meet its FY2026 targets by focusing on strong operational delivery in a stable oil price environment. It expects to see the start-up of Teal West field in 2026, and improved output from its Brunei asset, and enhancements across other fields.

It also expects to secure approval for its plan to develop the Pertang, Kenarong, Noring and Bedong (PKNB) gas fields, a key project for the group and its first direct production sharing contract award in Malaysia, with final investment decision to be made in 2026. This will allow certain resources to be reclassified as reserves, supporting its goal of achieving 100 million barrels in its proven and probable or 2P reserves for FY2026.

The group also reiterates its intention to invest in energy transition projects involving power generation, an initiative it announced at the start of August, to capitalise on and address the potential 5GW shortfall in Malaysia's power generation by 2030.

Hibiscus shares closed three sen or 1.97% lower at RM1.49 on Friday, valuing the group at RM1.1 billion.