Dialog confident of another record year in FY18

Dialog confident of another record year in FY18
24 Nov, 2017
Source: The Edge Financial Daily



Dialog confident of another record year in FY18


KUALA LUMPUR: Dialog Group Bhd is upbeat about achieving another record year with double-digit earnings growth in its current financial year ending June 30, 2018 (FY18), following a strong first quarter (1Q).

The group posted its highest net profit of RM370.6 million in FY17, up 25.7% year-on-year (y-o-y) from RM294.9 million.

Dialog’s net profit for 1QFY18 almost doubled y-o-y to RM160.9 million from RM81.3 million, thanks to higher contributions from both its midstream and downstream activities, in particular engineering and construction as well as plant maintenance from various projects.

“We are confident we can maintain double-digit growth in FY18. Two-thirds of the sectors we are in would do well,” group executive chairman Tan Sri Dr Ngau Boon Keat told reporters after the group’s annual general meeting yesterday.

Notwithstanding the challenging environment for oil and gas (O&G) players in FY17, Dialog posted stronger earnings, driven by both its midstream and downstream sectors, which benefi ted from depressed oil and gas prices.

The group’s net profi t grew at a compound annual growth rate of about 15.4% from FY12 to FY17. Even during the collapse of the oil price in 2014, the group managed to record a net profi t of RM229 million in FY14, up 23.8% y-o-y from RM185 million.

Its well-diversified business structure — it is involved in upstream, midstream and downstream businesses in the O&G industry — has helped the group withstand volatility in oil price and currency seen in the last two years.

On the outlook for the industry, Ngau said oil price is likely to have bottomed out but Dialog expects recovery in the upstream segment to be gradual as companies take time to raise their budget to boost exploration and production.

Moving forward, Dialog intends to continue growing its core businesses with a recurring income, especially in expanding its logistics businesses, which include storage tank terminals.

It is expanding its 1.3 million-cubic-metre Pengerang Deepwater Terminal Phase 1 by 430,000 cubic metres, while construction of Phase 2 is on track. As for Phase 3, Ngau said the group is looking for long-term partnerships that could enlarge Dialog’s customer base. Most companies that Dialog is talking to are foreign, he said.

The group announced it was in the midst of looking for new potential partners for Phase 3 of the project on Tuesday. Phase 3 includes the development of more petroleum and petrochemical storage terminals, which will add three million cubic metres of capacity in oil storage.