TNB 1Q net profit up 34.4% on higher sales from tariff hike

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KUALA LUMPUR: Tenaga Nasional Bhd (TNB) posted a 34.4% rise in net profit to RM2.35 billion in its first financial quarter ended Nov 30, 2014 (1QFY15) from RM1.75 billion a year ago on improved electricity sales from a tariff hike last year.

Revenue rose by 15.2% to RM11.03 billion from RM9.57 billion in 1QFY14, attributable to the increase in the average electricity tariff in Peninsular Malaysia and Sabah.

“The group recorded an 18.5% or RM1.68 billion improvement in sales of electricity from RM9.08 billion to RM10.76 billion. The improvement was mainly from sales of electricity in Peninsular Malaysia and Sabah, which each recorded an increase of 19.2% and 20.7%,” said TNB in a filing with Bursa Malaysia yesterday.

On Jan 1, 2014, the average electricity tariff in Peninsular Malaysia and Sabah was increased by 14.9% and 16.9% respectively.

In a separate statement, TNB (fundamental: 1.3; valuation: 1) said it had invested RM2.51 billion in capital expenditure in 1QFY15, up 73.2% from a year ago.

It noted that for 1QFY15, Peninsular Malaysia recorded unit electricity demand growth of 3.3% year-on-year, mainly contributed by the commercial and industrial sectors.

“Operating expenses for 1QFY15 increased by 3.6% to RM8.42 billion compared with RM8.12 billion in 1QFY14,” said TNB, adding that this was partly attributed to higher generation costs resulting from higher liquefied natural gas costs.

TNB president and chief executive officer Datuk Seri Azman Mohd said the group had entered the first regulatory period under the incentive-based regulation (IBR) starting Jan 1, 2015, amid the changing global economic environment.

Movements in economic factors such as currency fluctuations and interest rate will impact TNB and the power industry in general.

“As the group faces new challenges in the new environment, we will not lose our resolve to continuously ensure that the lights are on; and we will do this through efficient operations with enhanced transparency in the operational, financial and technical performance aspects of the company as mandated under the IBR,” said Azman.

TNB said it is cautious about the group’s prospects for FY15 in light of prevailing global economic conditions and volatility of foreign exchange impacting the Malaysian economy. In a separate filing with Bursa yesterday, TNB said the board had approved the extension of service of its non-executive chairman Tan Sri Leo Moggie for an additional two years until March 11, 2017.

TNB shares closed two sen or 0.14% higher at RM14.52 yesterday, giving it a market capitalisation of RM81.95 billion.



This article first appeared in The Edge Financial Daily, on January 23, 2015.