​​​​​​​Tenaga 1Q net profit at RM717.9m, hit by unrealised forex loss

  • Corporate News
  • Wednesday, 10 Jun 2020

KUALA LUMPUR: Tenaga Nasional Bhd posted net profit of RM717.90mil in the first quarter ended March 31, 2020, a decline of 53.8% compared with RM1.55bil a year ago including unrealised forex loss.

The power giant announced on Wednesday profit before forex translation gain/ loss was RM1.10bil compared with RM1.29bil a year ago. Its forex translation loss was RM388mil compared with a gain of RM263.5mil a year ago, adding the quarter saw volatile forex due to uncertainties in the global economy.

TNB’s revenue fell by 12% to RM11.65bil compared with RM13.24bil as overall revenue was impacted by the imbalance cost pass through (ICPT) being in a rebate position of RM307.5mil as against a surcharge position of RM1.37bil a year ago.

Earnings per share were 12.62 sen compared with 27.38 sen.

“Electricity sales in the first three months of this year was however, stable at 27,938.2 GWh or RM11.78bil compared with 28,471.1 GWh or RM12.03bil in the first quarter of 2019.

“Ebitda (earnings before interest, tax, depreciation and amortisation) margin improved 3.8% year-on-year due to a 15.4% decrease in operating expenses in the first quarter of 2020,” it said.

As for its international portfolios, TNB said in March 2020, it bought the remaining 20% stake of Tenaga Wind Ventures UK Ltd.

TNB intends to leverage on its UK investments and assets as a platform to grow its Renewable Energy portfolio, given the growth potential as the world shifts towards sustainable energy sources.

It had also reported that the Covid-19 pandemic is impacting the progress of the group’s initiatives to reduce its current exposure; including the restructuring and turnaround exercise and sale of investment, particularly in its 30% owned companies in GAMA (Turkey) and GMR (India). However, the group’s UK assets are insulated by the long-term subsidy scheme,” it said.

TNB said it would leverage on its existing UK assets and market experience to build up a sizeable renewable energy portfolio by 2021 through acquisitions of both operating assets and development of greenfield projects.

On power consumption, TNB also said the seasonal dry spell in March initially pushed Peninsular Malaysia’s power consumption to an all-time high of 18,808 MW on March 10. However, the imposition of the Movement Control Order (MCO) on March 18 saw overall electricity consumption in Peninsular Malaysia decline.

Businesses shut their operations following the government’s stay-at-home directive during the MCO. TNB said electricity usage in the industrial and commercials sectors dropped between 25% and 50% as business industries halted activities.

However, usage in the residential sector surged between 20% and 50% as families stayed indoors and workers worked from home.

“Overall, demand contracted by 1.9% in 1Q, before the full impact of the Covid-19 and corresponding MCO periods. “However, demand for May 2020 fell by 28% as compared to May last year. TNB expects the electricity consumption to drop between 7% and 15% year-on-year for 2020, mainly due to slowdown of activities in the commercial sector.

Nevertheless, earnings of TNB’s regulated revenue cap entities are guaranteed at demand growth of between 1.8% and 2% as stipulated by the Incentive-Based Regulation (IBR) guidelines in the Second Regulatory Period or RP2 (2018 to 2020).

Due to the fallout from the Covid-19 pandemic, TNB led Malaysian corporations in extending contributions at scale to provide immediate relief as well as to support initiatives for long-term economic recovery.

TNB president and CEO Amir Hamzah Azizan (above) said: “As an essential services provider, TNB has a critical role in supporting the Malaysian Government’s efforts to revive the economy and assist those whose livelihoods are affected. Facilitating economic stimulus at this time should be made a priority.

“For TNB, even though we are facing a hit to our revenue collection, we can remain resilient due to a robust balance sheet. Giving more now to help the nation rise out of this economic slump is going to yield better times for all of us collectively.”

In addition to an immediate RM10mil provided to the Ministry of Health at the onset of the pandemic, TNB also extended RM17.5mil to State Governments to secure essential medical supplies and protective equipment, and to address the most pressing needs in the early stages of the MCO.

TNB also allocated RM150mil to fund the tiered electricity discounts of between 2% and 50% from April to September 2020, announced as part of the government’s PRIHATIN stimulus package.

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Tenaga Nasional , TNB , earnings


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