Union Gas Holdings Limited FY2025 Results: Growth in Revenue but Margin Pressures Persist

Union Gas Holdings Limited released its condensed financial statements for the six months and full year ended 31 December 2025. The results reflect robust top-line growth, driven notably by the expansion of the liquid fuel business, but also a notable decline in profit margins due to increased costs and other headwinds. Below, we break down the key financial metrics, trends, segmental performance, and outlook for investors.

Key Financial Metrics & YoY, QoQ Comparison

Historical Performance Trends

• Revenue: Full-year revenue rose 9.9% YoY to \$137.95m (FY2024: \$125.55m), primarily led by the near doubling of the liquid fuel segment due to new service station openings.
• Net Profit: Despite the top-line growth, net profit fell 15.8% YoY to \$10.52m, highlighting significant margin pressure.
• Gross Profit: Marginal improvement of 1.9% YoY in gross profit, with gross margin compressed by higher material and depreciation costs.
• Expenses: Marketing, distribution, administrative, and finance costs all increased, reflecting investments in new stations and higher operating costs.

Segmental Performance

• Gas Fuel: Revenue declined 2.8% YoY to \$106.7m due to lower volumes.
• Liquid Fuel: Revenue surged 93.9% YoY to \$30.31m, driven by new service stations and higher sales volumes.
• Others (including EV charging, industrial gases): Revenue rose 564% YoY to \$0.93m, reflecting the ramp-up of new business lines.

Dividends

• The Board proposed a final dividend of 1.00 Singapore cent per share (subject to approval), up from 0.88 cent in FY2024.
• The interim dividend for FY2025 was 0.48 cent, down from 0.60 cent in FY2024.
• Total dividends declared for FY2025 stood at 1.48 cents per share (FY2024: 1.48 cents per share).

Cash Flow and Financial Position

• Operating Cash Flow: Generated \$23.47m in FY2025 (FY2024: \$22.35m), a slight increase, despite working capital outflows and higher taxes paid.
• Investing Activities: Net outflow of \$7.65m due to significant investments in property, plant, equipment, and right-of-use assets (mainly new stations).
• Financing Activities: Net outflow of \$13.57m, driven by repayments of borrowings and lease liabilities, and dividend payments.
• Cash on Hand: Closed the year with \$14.83m in cash and equivalents (up from \$12.57m in the prior year).

Balance Sheet Highlights

• Total Assets: \$175.7m (up 17.1% YoY).
• Equity Attributable to Owners: \$77.96m (up 0.6% YoY).
• Net Asset Value per Share: 24.55 cents (FY2024: 24.41 cents).
• Borrowings and Lease Liabilities: Notable increase in lease liabilities to \$37.77m (FY2024: \$19.33m), reflecting right-of-use assets for new stations.

Significant Events & Forward-Looking Statements

• Expansion: Two new service stations opened (Dunman Road in October 2025 and Queensway in February 2026). Marsiling station expected to start in 2027.
• Hedging Losses: Marked-to-market losses on commodities futures contracts, with derivatives swinging from a positive \$2.29m asset to a \$3.05m liability.
• Related-Party Transactions: Insignificant in value for FY2025.
• Treasury Shares: No further buybacks in FY2025; 222,000 shares held as treasury (0.07% of total shares outstanding).

Chairman’s Statement & Tone

“Union Gas remains cautiously optimistic about its prospects in FY2026, supported by the essential nature of its fuel and energy offerings and the expansion of its retail network… Looking ahead, the Group will continue to look for opportunities to strategically expand its service station locations, while strengthening its marketing-leading position in gas fuels. The Group will remain disciplined in managing costs and focused on delivering consistent value to our shareholders.”

The tone is generally positive but marked by caution, reflecting awareness of margin pressures, cost discipline, and the need to manage expansion risks.

Conclusion and Investor Recommendations

Overall Financial Performance & Outlook:
Union Gas delivered a strong top-line performance in FY2025, powered by the expansion of its liquid fuel business and new service station openings. However, rising costs, compressed margins, and increased finance and administrative expenses weighed on profitability, resulting in a double-digit decline in net profit. The balance sheet remains healthy, with increased assets and equity, while the company demonstrated the ability to generate stable operating cash flows and maintain its dividend payout.

• For Current Shareholders:
  The outlook is cautiously positive given the Group’s continued expansion, growing retail footprint, and resilient cash flows. However, the ongoing margin pressures, increased leverage, and exposure to commodity price swings warrant close monitoring. Hold the stock if you are comfortable with moderate risk and are seeking stable dividends. Consider reviewing your position if there are signs of further margin erosion or significant negative developments in the fuel market.
• For Potential Investors:
  Union Gas offers exposure to the essential energy sector in Singapore with a growing retail network and a consistent dividend policy. The current period of investment and expansion may present an attractive entry point, especially if the Group successfully turns higher revenues into stronger profits as new stations mature. However, wait for signs of margin recovery and sustained profit growth before initiating a position unless you have a long-term risk appetite.

Disclaimer: This analysis is based solely on information published in the company’s FY2025 financial report and does not constitute investment advice. Investors should conduct their own due diligence and consider their own financial situation and risk tolerance before making any investment decisions.

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