KUALA LUMPUR (Jan 28): Tenaga Nasional Bhd (TNB) saw its net profit fall 16% to RM1.98 billion or 35.01 sen per share for the first quarter ended Nov 30, 2015 (1QFY16), from RM2.35 billion or 41.67 sen per share in the previous year, due to the recognition of the imbalance cost pass through (ICPT) and foreign exchange translation loss.

Revenue for the quarter was 3% lower at RM10.68 billion compared to RM11.03 billion a year earlier, its bourse filing today showed.

"The reduction [in profit] is mainly due to the recognition of imbalance cost pass through in the current reporting period and the strengthening of the US dollar and Japanese yen against the ringgit," said the group.

According to its financial statements for the period, TNB recorded a foreign exchange translation loss of RM58.5 million, versus a gain of RM45.9 million in the year before.

Meanwhile, TNB said the sales of electricity for the period rose 3.9% to RM11.18 billion from RM10.76 billion, mainly due to a 3.6% sales increase in Peninsular Malaysia electricity sales.

Going forward, the group expects challenges ahead, amid the volatility of the ringgit and various external headwinds, such as the slowdown and rebalancing of the Chinese economy, and lower prices of commodities.

"Additionally, the Malaysian government today announced the recalibration of the 2016 Budget to ensure the Malaysian economic growth remains on track with a reduced 2016 GDP growth outlook of 4%–4.5%.

"Given the foregoing scenario and the volatility of the ringgit, the board of directors recognises the challenging prospects of the group for the year ending Aug 31, 2016," said TNB.

TNB shares closed 20 sen or 1.54% higher at RM13.20 today, giving it a market capitalisation of RM73.37 billion.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)