KUALA LUMPUR: Tenaga Nasional Bhd (TNB) saw its net profit for the second financial quarter ended Feb 28, 2015 (2QFY15) rise 24.4% to RM2.16 billion from RM1.73 billion a year ago. This is on lower generation costs due to a lower coal price and lower usage of the more expensive liquefied natural gas for fuel.

The coal price for 2QFY15 was US$66.40 (RM237.04) per tonne compared with US$70.20 per tonne in 1QFY15.

Revenue rose 6.1% to RM10.61 billion from RM10 billion in 2QFY14, mainly due to higher sales of electricity in Peninsular Malaysia and Sabah, which recorded an increase of 12.6% and 14.2% respectively, thanks to a hike in the average electricity tariff.

In a filing with Bursa Malaysia yesterday, TNB (fundamental: 1.3; valuation: 1.8) said the average electricity tariff in the peninsula and Sabah rose 14.9% and 16.9% respectively, effective Jan 1, 2014.

For the six months period (1HFY15), TNB recorded a net profit of RM4.51 billion, up 29.4% from RM3.48 billion a year ago, mainly due to increased revenue and lower operating expenses.

Revenue for 1HFY15 rose 9.2% to RM21.64 billion from RM19.57 billion, on improved sales of electricity in the peninsula and Sabah, by 15.8% and 17.4% respectively.

The coal price for 1HFY15 was US$68.40 per tonne from US$77.50 per tonne a year ago.

However, TNB said the imbalance cost pass-through (ICPT) process has yet to be automatically effected. When fully effected, the group’s results will need to reflect the over-recovery amounting to RM1.5 billion (net of tax), which is subject to final confirmation.

The ICPT allows TNB as the national utility to reflect changes (either an increase or reduction) of fuel and other generation costs in the electricity tariff every six months.

TNB president and chief executive officer Datuk Seri Azman Mohd said the current global economic environment will bring forth a new, challenging landscape for the group.

“The changing global environment will not deter us from [achieving] our aspirations, that is to excel in the current regulatory environment and to expand our presence in the unregulated business environment,” he said in a statement yesterday.

TNB shares closed unchanged at RM14.60 yesterday, giving it a market capitalisation of RM82.4 billion.

This article first appeared in The Edge Financial Daily, on April 28, 2015.