TNB first quarter net profit rises to RM2.16bil

Utility giant’s bottom line boosted by forex gain of RM294mil

PETALING JAYA: Tenaga Nasional Bhd’s (TNB) net profit rose by 23.6% to RM2.16bil in the first quarter ended Nov 30, 2017 compared with RM1.79bil made in the same quarter in the previous year, boosted by the stronger ringgit that translated into a foreign exchange gain of RM294mil.

“The higher group net profit was mainly due to favourable foreign exchange translation, boosted by the strengthening of the ringgit.

“This indicates positive macroeconomic development in Malaysia, which benefits TNB in terms of electricity demand,” TNB president and chief executive officer Datuk Seri Azman Mohd said in a press statement.

“More importantly, the stability of the group earnings was underpinned by the effective implementation of the imbalanced cost pass through (ICPT) mechanism under the Incentive Based Regulation or the IBR Framework,” he added.

Its basic earnings per share rose to 37.98 sen in the quarter against 30.79 sen a year ago.

Electricity demand growth in Peninsular Malaysia for the period was at 1.2%, the electricity provider for the Peninsular said, mainly contributed by the continuing upward trend in the industrial sector.

“The stability in the group’s operating profit will benefit the shareholders, in the form of sustainable stream of future divi- dend payout as well as capital gains,” a company statement said.

Operating expenses also raised in tandem by 6.3% to RM9.7bil, compared with RM9.1bil previously.

The higher operating expenditure was mainly contributed by higher generation cost from fuel cost escalation, the firm said.

However, it said due to the effective implementation of ICPT mechanism, it remained neutral from any fluctuation in fuel prices.

“The earnings stability is crucial to ensure that TNB has the capability to continuously invest in the nation’s infrastructure, to ensure system efficiency, security and reliability,” Azman said.

“We are investing substantially in capital expenditure to match the country’s future anticipated energy capacity requirement,” said TNB.

Currently, there are three generation projects with almost 3,500 megawatt capacities due to be commissioned within year 2018 to 2020.

These generation projects represent 71% of the group total capital expenditure investment of RM3.71bil in the first quarter.

The company said that investments also contributed to the strengthening the group balance sheet with its total group asset base increasing to RM146.1bil as at Nov 30, 2017.

TNB will also be changing its fiscal reporting year end to Dec 31, 2017, from Aug 31, 2017 previously.

“This short financial year commenced from Sept, 2017 to Dec 31, 2017, covers a period of four months. Thereafter, the financial year of the group shall revert to twelve months ending Dec 31, 2018,” TNB said.

We are investing substantially in capital expenditure to match the country’s future anticipated energy capacity requirement. TNB