PETALING JAYA: Dialog Group Bhd
suffered its first quarterly loss since its debut on the Main Market some 25 years ago, following weaker revenue, project cost-overruns and a one-off impairment of investments.
Dialog said the decision to impair investments in petrochemical and renewable projects was part of its “strategic realignment and in response to evolving industry dynamics”, but reassured shareholders that it is optimistic of its positive performance in the financial year ending June 30, 2025 (FY25).
In the second quarter ended Dec 31, 2024, the oil and gas services player recorded a net loss of RM129.49mil as compared to a net profit of RM148.29mil a year earlier.
Revenue also fell significantly by nearly 21% year-on-year (y-o-y) to RM680mil.
Dialog attributed the second-quarter net loss partly to the challenges encountered by its Malaysian downstream operations during the pre-commissioning and commissioning stages of its ongoing engineering, procurement, construction and commissioning projects. This resulted in higher costs.
“Nonetheless, the group is committed to completing and delivering these projects.
“The cost overruns and project losses have been addressed and accounted for as the projects approach completion,” Dialog said in a filing with Bursa Malaysia.
Dialog also said it has discontinued its investment in a downstream specialty chemical plant producing malic acid in Kuantan.
This was following a 20-30% drop in malic acid prices across Southeast Asia due to oversupply and the continued volatility in the global chemicals market.
The total capital expenditure incurred to date of RM90.7mil has been written off in the current financial quarter.
“By making this strategic decision, the group will be able to realign its focus back to its core business, positioning the group for long-term growth and resilience.”
Dialog also made full impairment of investment in a joint venture company involved in the production of food grade recycled polyethylene terephthalate pellets (rPET).
The decision was made mainly due to the delayed commitment by the brand owners to increase their recycled content resulting in persistent soft demand for food grade rPET.
In addition to these reasons, Dialog also saw lower profits from its international operations as it has not consolidated the earnings from Dialog Jubail Supply Base, which is pending completion of disposal.
Unrealised foreign exchange losses from joint ventures and associates also dragged down Dialog’s bottomline.
With the group falling into losses, second-quarter loss per share was recorded at 2.29 sen. No dividend was declared for the quarter.
Cumulatively, for the first half of FY25, the group’s net profit tumbled by 92.3% y-o-y to RM21.48mil, while revenue fell by nearly 20% to RM1.31bil.
Looking ahead, Dialog said it will grow its upstream business through the development and rejuvenation of oil and gas fields. It will also expand its fabrication facilities in Pengerang with an investment value of approximately RM250mil.
