TNB’s profit hit by higher forex loss

Tenaga Nasional Bhd (TNB) logo is seen on the signage at its power station in Malacca at sunset. (Pix taken by M. Hafidz Mahpar for Star Online)

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) posted earnings of RM1.74bil in the first quarter ended Nov 30, 2016, down 12% from a year earlier as foreign exchange (forex) translation loss almost quadrupled to RM231.2mil.

In its latest quarterly financial report to the stock exchange, the utility giant said the earnings drop was mainly due to the US dollar strengthening against the ringgit.

Revenue, however, increased 5% to RM11.24bil as the group increased its electricity sales by 3% to RM11.52bil. All the growth came from sales of electricity in Peninsular Malaysia, which rose 3.5% or RM369.7mil.

On its appeal to the Special Commissioners of Income Tax over the additional RM2.07bil tax bill imposed byh the Inland Revenue Board, TNB said it had made no provision in the financial statements for the contingent liabilities up to the reporting date based on the legal advice it received. 

As for the group’s prospects this year, TNB said it recognised that a potential widening of global imbalances coupled with volatility in exchange rates would be challenging risks to the group.

“Thus the board continues to remain cautious on the group’s prospect for financial year 2017,” it said.

TNB noted that International Monetary Fund, in its recent World Economic Outlook Update, highlighted the risks to the global growth outlook to be skewed to the downside, especially over the medium term.

On the domestic front, it pointed out that the Malaysian Institute of Economic Research last week downgraded real gross domestic product growth for 2017 to 4.5%, the lower bound of the range of its earlier forecast of 4.5% to 5.5%, as some downside risks are beginning to emerge.