Perdana Petroleum Navigates Choppy Waters: A Deep Dive into Q1 2025 Performance
Perdana Petroleum Berhad, a key player in Malaysia’s offshore support vessel (OSV) services sector, has just released its interim financial report for the first quarter ended 31 March 2025. This report offers a glimpse into the company’s performance amidst a dynamic and challenging market environment. While the quarter saw a significant downturn in financial figures, it also highlights the strategic adjustments being made to navigate current headwinds and position for future resilience.
The core takeaway? Perdana Petroleum experienced a substantial drop in revenue and swung to a loss in the first quarter of 2025, primarily due to lower vessel utilization rates and reduced third-party vessel chartering activities. However, the company is actively addressing market challenges and maintaining a cautious yet optimistic outlook on the long-term prospects of the OSV sector.
Q1 2025 Performance Overview: A Challenging Start to the Year
The first quarter of 2025 presented significant challenges for Perdana Petroleum, with key financial metrics showing a notable decline when compared to the corresponding quarter in 2024. This downturn was largely attributed to lower vessel utilization rates and a reduction in third-party vessel chartering.
Q1 2025
- Revenue: RM37,563,000
- Gross Loss: RM14,531,000
- Loss Before Tax: RM16,526,000
- Loss After Tax: RM18,328,000
- Basic Loss Per Share: 0.82 sen
Q1 2024
- Revenue: RM99,219,000
- Gross Profit: RM25,484,000
- Profit Before Tax: RM9,268,000
- Profit After Tax: RM6,071,000
- Basic Earnings Per Share: 0.27 sen
As the comparison shows, revenue for the current quarter plummeted by 62% to RM37.6 million from RM99.2 million in the first quarter of 2024. This significant drop led to a gross loss of RM14.5 million, a stark contrast to the RM25.5 million gross profit recorded previously. Consequently, the company registered a loss before tax of RM16.5 million, reversing the RM9.3 million profit from the prior year. The net loss after tax stood at RM18.3 million, translating to a basic loss per share of 0.82 sen.
The report highlights that the lower revenue was mainly due to a significantly lower vessel utilization rate of 31%, compared to 62% in the corresponding quarter of 2024. This was compounded by reduced third-party vessel chartering, which fell from RM36.7 million to RM7.9 million. Delays in project commencements by oil majors and the absence of project spill-over from previous years further contributed to the lower utilization. Despite the lower utilization, vessel direct costs remained high as the company prepared vessels for long-term contracts requiring higher standards. A positive note was an unrealized gain on foreign exchange of RM3.1 million, which partially offset the losses.
Sequential Quarter Performance: A Dip from the Previous Quarter
Comparing the first quarter of 2025 with the immediate preceding quarter (Q4 2024) also reveals a downturn in performance, reflecting the challenges faced at the beginning of the year.
Q1 2025
- Revenue: RM37,563,000
- Gross Loss: RM14,531,000
- Loss Before Tax: RM16,526,000
- Loss After Tax: RM18,328,000
Q4 2024
- Revenue: RM89,051,000
- Gross Profit: RM33,106,000
- Profit Before Tax: RM24,115,000
- Profit After Tax: RM29,548,000
Revenue decreased by 58% from RM89.1 million in Q4 2024 to RM37.6 million in Q1 2025. This led to a significant swing from a gross profit of RM33.1 million in the preceding quarter to a gross loss of RM14.5 million. The company’s profit before tax of RM24.1 million in Q4 2024 turned into a loss before tax of RM16.5 million in the current quarter. Similarly, the profit after tax of RM29.5 million in the preceding quarter became a loss of RM18.3 million.
This sequential decline was primarily due to a lower utilization rate (31% compared to 50% in Q4 2024), stiffer competition in securing third-party vessels, and reduced income from chargeable ancillary services like catering. While an unrealized foreign exchange gain of RM3.1 million provided some relief, the overall impact of lower vessel contributions led to the reported loss.
Financial Health Check: Navigating the Balance Sheet
Despite the operational challenges, Perdana Petroleum’s balance sheet as at 31 March 2025 shows a relatively stable financial position, with managing its liabilities effectively.
Total assets stood at RM904.4 million, a slight decrease from RM959.8 million at 31 December 2024. This was accompanied by a reduction in total liabilities to RM145.9 million from RM174.5 million, indicating active management of its financial obligations. Total equity attributable to owners of the company was RM758.5 million (RM0.34 net assets per share), down from RM785.4 million (RM0.35 net assets per share) at the end of the last financial year.
The Group’s total outstanding borrowings decreased to RM13.7 million as at 31 March 2025, from RM16.3 million at 31 December 2024, reflecting a positive trend in debt reduction.
From a cash flow perspective, the Group generated RM62.1 million in net cash from operating activities during the quarter. This positive operating cash flow, despite the reported loss, indicates the company’s ability to manage its day-to-day operations and generate cash from its core business, a crucial factor for long-term sustainability.
Navigating the Headwinds: Risks & Industry Landscape
Perdana Petroleum acknowledges the complex operating environment, balancing growth aspirations with ongoing geopolitical uncertainties. The U.S. Energy Information Administration (EIA) and the International Monetary Fund (IMF) both forecast a lower average Brent crude oil price for 2025 (around USD67-USD68 per barrel), citing higher global supply and slower demand growth. Geopolitical risks, particularly in the Middle East, also continue to threaten supply stability.
Domestically, PETRONAS remains committed to advancing upstream activities, with plans to maintain Malaysia’s oil and gas production at 2 million barrels of oil equivalent per day from 2025 to 2027. The launch of Malaysia Bid Round (MBR) 2025 further signals continued investment in the sector. This sustained focus on offshore development and maintenance segments is expected to drive demand for OSV services, which is a positive for Perdana Petroleum.
The OSV industry itself is facing a constrained vessel supply, with limited newbuilds entering the market due to financing challenges, partly influenced by ESG-related restrictions. While this could lead to better charter rates for existing vessels, the company remains cautiously optimistic given prevailing uncertainties such as tariff tensions, Middle East conflicts, currency fluctuations (USD/MYR), rising inflation, and interest rates.
The company also highlighted some contingent liabilities, including two incidents of anchor loss involving offshore support vessels, with one claim settled and another under review by the Protection and Indemnity Mutual Association. Additionally, an incident involving an OSV chartered to a client in Q4 2023 is still under investigation, with the cost of alleged damage yet to be ascertained. The company’s directors are of the view that no material losses will arise from these claims.
Strategic Response and Future Outlook
In response to the challenging market conditions, Perdana Petroleum is focused on leveraging its core strengths and continuously improving operational efficiency to ensure long-term sustainability and maintain its relevance in a dynamic market environment. The revision of useful lives for Anchor Handling Tug Supply (AHTS) vessels to 20 years, following an oil-major client’s agreement, has resulted in reduced depreciation charges and reflects a strategic adjustment to asset management.
The company’s commitment to preparing its vessels for long-term contracts with oil majors, despite the high direct costs incurred during the current low utilization period, indicates a forward-looking strategy aimed at securing future revenue streams and meeting industry standards.
Summary and
Perdana Petroleum Berhad faced a challenging first quarter in 2025, marked by a significant decline in revenue and a swing to a net loss compared to both the corresponding period last year and the immediate preceding quarter. The primary drivers for this downturn were lower vessel utilization rates, delays in project commencements by oil majors, and increased competition in third-party vessel chartering. However, the company demonstrated prudent financial management by reducing its overall borrowings and generating positive cash flow from operations, which provides a degree of financial stability.
Looking ahead, the outlook for the OSV sector is mixed. While global oil price forecasts suggest a tempered environment, PETRONAS’s sustained commitment to upstream activities in Malaysia offers a positive domestic demand signal. The constrained supply of new OSVs due to financing and ESG factors could also benefit existing players. Perdana Petroleum’s strategy of focusing on operational efficiency and preparing its fleet for higher-standard, long-term contracts is crucial for navigating these complexities.
Key risk points to consider for the company’s future performance include:
- Continued low utilization rates for its vessel fleet due to project delays.
- Intensified competition in the third-party vessel chartering market.
- The ongoing need to manage high vessel direct costs, especially during periods of lower activity, to ensure readiness for future contracts.
- Exposure to geopolitical uncertainties, fluctuating oil prices, and currency exchange rate movements (USD/MYR).
- Potential impacts from contingent liabilities, such as unresolved anchor loss claims and other vessel incidents, though the company views material losses as unlikely.
The first quarter results underscore the volatile nature of the offshore support services industry. While the numbers reflect a tough operating environment, Perdana Petroleum’s efforts in managing its financial health and strategically positioning its assets for future demand are noteworthy. Do you think Perdana Petroleum can maintain this growth momentum in the next few years, especially with PETRONAS’s continued focus on upstream activities?
Share your thoughts in the comment section below!
