KUALA LUMPUR (July 27): Tenaga Nasional Bhd’s (TNB’s) net profit for its third quarter ended May 31, 2017 (3QFY17) shrank 15% to RM1.96 billion or 34.68 sen per share, from RM2.31 billion or 40.91 per share a year ago, mainly due to higher deferred tax expense.

Deferred taxation expense jumped to RM400 million, from RM22.1 million last year, as a result of higher asset capitalisation over its 2016 and 2017 financial years (FY16 and FY17) that was recognised in the quarter.

However, revenue for the quarter was up 3.5% to RM12.55 billion, from RM12.13 billion due to an under-recoverability in costs via the Imbalance Cost Pass-Through (ICPT) mechanism recognized in 3QFY17, as compared with an over-recoverability of RM537.6 million recognised in 3QFY16, TNB said in a filing with Bursa Malaysia today.

For the nine months ended May 31, 2017, net profit fell 7.5% to RM5.18 billion, from RM5.61 billion in the previous corresponding period, mainly due to an increase in finance cost from interest recognised on amounts owing to the government, and from new borrowings acquired in the current period, the group said.

Meanwhile, revenue for the same period was up 5% to RM34.95 billion, from RM33.29 billion, largely due to recoverability of higher generation costs via the effective implementation of the ICPT mechanism.

The ICPT mechanism, a part of the wider regulatory reform called the Incentive Based Regulation, allows for TNB to be financially neutral from any variations in generation costs and fuel prices. 

“The over-recoverability of the ICPT recognised during the current period of RM288.8 million is lower as compared to the last corresponding period of RM1.93 billion,” TNB said.

Going forward, TNB said it expects unit electricity demand to grow in line with the projected gross domestic product (GDP) growth for the year, which was updated by the International Monetary Fund to 4.8%, from 4.5% on July 24.

“However, we remain cautious on the group’s outlook for the year ending Aug 31, 2017, given the prospect of volatility in the global commodity and energy prices,” TNB said.

Shares in TNB closed up 2 sen or 0.14% at RM14.24 per share today, on some 14.41 million shares traded. The national utilities company had a market capitalisation of RM80.58 billion.