KUALA LUMPUR (Nov 15): Dialog Group Bhd’s net profit for the first quarter ended Sept 30, 2022 (1QFY2023) slipped 2.35% to RM125.79 million, from RM128.82 million a year earlier, due to higher project and operation cost.

Earnings per share dropped to 2.23 sen from 2.28 sen, the integrated technical service provider’s bourse filing showed.

Quarterly revenue, however, climbed 40.8% to RM711.7 million, from RM505.45 million for 1QFY2022, on increased activities contributed by both local and international operations.

Dialog said its local downstream team remained busy with various ongoing engineering, construction, fabrication, and plant maintenance projects.

However, unprecedented challenges due to Covid-19, conflict in Ukraine, inflationary pressure and manpower constraints led to severe supply chain disruption, higher material prices and labour cost, it added.

“Despite these challenges, the group’s main priority was to complete and deliver the committed projects.

“These inevitably resulted in cost overruns and some project losses. Discussions are currently ongoing with our clients for reimbursement and compensation for these project overruns caused by the challenges,” the group added.

For the midstream business, Dialog said its Terminals Langsat with total capacity of 855,000 cubic metres and Terminals Pengerang (430,000 cubic metres) continued to contribute a stable revenue stream to the group.

Such profit contributions were lower in 1QFY2023 due to higher financing cost, the group said.

“Upstream activities also contributed a lower net profit for the financial quarter, resulting from lower production at both Bayan and D35/D21/J4 fields due to drilling and maintenance activities,” it added.

On the international front, Dialog said it recorded a higher revenue for the quarter, with higher sales of specialist products and services in various countries, although net profit after tax was lower due to a challenging environment.

Meanwhile, on a quarter-on-quarter basis, the group's net profit rose 6.37% from RM118.25 million for 4QFY2022, as revenue grew 5.33% from RM675.65 million.

Looking ahead, Dialog said it will remain focused and steadfast in the pursuit of its key long-term strategies, with the group remaining confident that its business model is well structured to manage and sustain itself through periods of economic uncertainty, oil price volatility and currency movements.

For the upstream business, Dialog said it will actively look for opportunities to increase the group’s development and production services and assets, while incorporating new technologies to manage greenhouse gas emissions.

As for the midstream business, Dialog said it will continue to invest in phased capacity expansion for dedicated long-term customers across its midstream terminals business portfolio, in line with the group’s longer-term strategy to grow its sustainable and recurring income.

“For the downstream business, we will continue to leverage our strengths and established track record in integrated technical services comprising engineering, procurement, construction and commissioning (EPCC), plant maintenance and catalyst handling services, and specialist products and services,” it said.  

Dialog shares finished five sen or 2.4% lower at RM2.03 each on Tuesday (Nov 15), bringing the group a market capitalisation of RM11.5 billion.