WASCO BERHAD’s Q1 2025 Performance: Revenue Growth Amidst Profit Headwinds
Greetings, Malaysian retail investors! Today, we’re diving into the latest financial disclosures from WASCO BERHAD, a prominent player in the energy and bioenergy services sectors. The company has just released its unaudited consolidated results for the first quarter ended 31 March 2025, and there’s quite a bit to unpack. While WASCO saw an encouraging increase in revenue, its profit figures experienced a notable decline compared to the same period last year. On a positive note, the Board of Directors has also declared an interim cash dividend, signaling a return to shareholders.
This report offers a comprehensive look at WASCO’s financial health, segment performance, and strategic outlook. Let’s explore the key highlights that will shape your understanding of the company’s current standing and future trajectory.
Core Financial Highlights: A Mixed Bag
WASCO BERHAD’s first quarter of 2025 presents a mixed financial picture, with revenue growth overshadowed by a significant drop in profitability. Here’s a closer look at the core numbers:
Current Quarter Ended 31 March 2025
- Gross Revenue: RM719.3 million
- Profit Before Tax (PBT): RM46.4 million
- Net Profit Attributable to Owners: RM35.4 million
- Basic Earnings per Share: 4.58 sen
Preceding Year Corresponding Quarter Ended 31 March 2024
- Gross Revenue: RM643.9 million
- Profit Before Tax (PBT): RM101.1 million
- Net Profit Attributable to Owners: RM57.0 million
- Basic Earnings per Share: 7.36 sen
The Group’s gross revenue increased by 11.7%, rising from RM643.9 million in the first quarter of 2024 to RM719.3 million in the first quarter of 2025. This indicates strong top-line growth and increased business activity. However, Profit Before Tax (PBT) saw a substantial decrease of 54.1%, falling from RM101.1 million to RM46.4 million. Similarly, net profit attributable to owners declined by 37.8%, settling at RM35.4 million from RM57.0 million in the previous corresponding period. This translated directly to a lower Basic Earnings per Share of 4.58 sen, down from 7.36 sen.
The report attributes the lower profit primarily to the execution of projects with lower margins within the Energy Services segment, coupled with weak performance from associates and joint ventures. Furthermore, the Bioenergy Services segment’s profit comparison was impacted by a one-off gain on disposal of assets held for sale amounting to RM30.5 million recognized in the corresponding period of 2024.
Segmental Performance Deep Dive
Understanding WASCO’s performance requires a look at its key business segments:
Energy Services Segment
The Energy Services segment reported an external revenue of RM657.3 million for the first quarter of 2025, an increase from RM592.3 million in the first quarter of 2024. This growth was driven by increased project execution activities. Despite higher revenue, the segment’s profit before tax decreased to RM50.4 million from RM83.3 million in the corresponding period last year. This decline was mainly due to the execution of lower-margin projects and underperforming associates and joint ventures.
Bioenergy Services Segment
The Bioenergy Services segment also experienced revenue growth, with external revenue reaching RM61.4 million in the first quarter of 2025, up from RM51.6 million in the first quarter of 2024. This was largely due to an increased number of projects executed and higher sales of steam turbines and other equipment. However, the segment’s profit before tax was significantly lower at RM6.7 million compared to RM34.0 million in the previous corresponding period. The primary reason for this sharp decline was the absence of the one-off gain on disposal of assets held for sale (RM30.5 million) that boosted profits in the first quarter of 2024. Excluding this one-off item, the segment actually saw an increase in profit due to better margins generated on sales recognized in the current quarter.
Financial Health and Cash Flow
WASCO’s financial position as at 31 March 2025 shows a slight decrease in total assets but an improvement in net equity and a reduction in liabilities compared to 31 December 2024.
| Financial Metric | As at 31 March 2025 (RM’000) | As at 31 December 2024 (RM’000) | Change (RM’000) | Percentage Change (%) |
|---|---|---|---|---|
| Total Assets | 2,700,299 | 2,889,641 | (189,342) | -6.55% |
| Total Equity | 960,104 | 948,125 | 11,979 | +1.26% |
| Total Liabilities | 1,740,195 | 1,941,516 | (201,321) | -10.37% |
The Group’s cash and cash equivalents at the end of the first quarter of 2025 stood at RM291.2 million, a significant improvement from RM228.9 million in the same period last year. This positive change is largely attributed to net cash generated from operating activities, which surged to RM91.9 million in the first quarter of 2025, a remarkable turnaround from a net cash usage of RM33.6 million in the first quarter of 2024. This indicates a much healthier operational cash flow generation.
Risks and Prospects: Navigating Challenges and Seizing Opportunities
WASCO is currently operating with a robust order book of RM2.4 billion, with the Energy Services segment contributing RM2.1 billion and the Bioenergy Services segment holding RM284.2 million. This substantial order book provides a good foundation for future revenue. However, the lower profit margins on current projects and the weak performance of some associates and joint ventures present challenges that the company needs to address.
The Group is actively monitoring its tender book and expects to secure new projects in the second half of the financial year ending 2025. These new projects are anticipated to provide positive contributions moving forward, potentially offsetting the impact of lower-margin projects currently being executed. The company’s ability to secure higher-margin contracts and improve the performance of its joint ventures will be crucial for enhancing overall profitability.
Shareholder Returns: Interim Dividend Declared
In a positive development for shareholders, WASCO’s Board of Directors declared an interim single-tier cash dividend of 2.00 sen per share for the financial year ended 31 December 2024. This dividend, amounting to approximately RM15.49 million, was paid on 3 April 2025. It’s worth noting that no dividend was declared in the corresponding prior financial period, making this announcement a welcome sign for investors.
Summary and
WASCO BERHAD’s first quarter of 2025 showcases a company actively engaged in its core businesses, achieving notable revenue growth. The increase in project execution activities in both Energy and Bioenergy Services segments underscores a strong demand for its offerings. The turnaround in operating cash flow is also a very positive sign, indicating improved efficiency in managing its daily operations.
However, the significant decline in profitability, primarily due to lower project margins and underperforming investments, highlights areas that require close attention. The absence of one-off gains also makes the comparison challenging. The company’s substantial order book provides a clear path for future revenue, but the focus must shift towards securing projects with better profitability and optimizing the contributions from its associates and joint ventures.
Key points from this report include:
- Robust revenue growth, indicating strong business activity.
- Significant decline in profit before tax and net profit due to lower margins and underperforming investments.
- Healthy operational cash flow generation, a positive indicator of financial efficiency.
- A substantial order book providing future revenue visibility.
- Declaration of an interim dividend, reflecting a commitment to shareholder returns.
As WASCO moves into the second half of 2025, its ability to convert its strong order book into profitable ventures and improve the performance of its strategic partnerships will be key determinants of its financial success. Investors should monitor the company’s efforts to secure higher-margin projects and enhance operational efficiency.
From a professional standpoint, while the top-line growth is encouraging, the compression in margins and the impact from associates and joint ventures are critical factors to watch. The dividend declaration is a good gesture, but sustainable profit recovery will be essential for long-term value creation.
What are your thoughts on WASCO BERHAD’s latest quarter? Do you believe the company can effectively navigate the challenges of lower margins and capitalize on its strong order book in the coming quarters? Share your views in the comments section below!
