Business

Thursday April 16, 2009

TNB sees net profit drop for second quarter

By LEONG HUNG YEE


Slower demand and higher coal prices push costs up

KUALA LUMPUR: Tenaga Nasional Bhd’s (TNB) net profit for its second quarter ended Feb 28 dropped to RM674.6mil compared with RM1.06bil in the previous corresponding period, as electricity demand continued to slow and higher coal prices pushed costs up.

While its revenue for the quarter was 15.6% higher at RM6.9bil from RM5.97bil a year ago, it was 6.9% lower than the preceding quarter’s RM7.4bil.

It reported earnings per share of 15.56 sen versus 24.54 sen a year ago. It also announced a dividend of 4.7 sen per share for the second quarter.

TNB also managed to reduce its operating expenses by 11.2% to RM5.84bil from RM6.58bil previously. This resulted in a 38.3% improvement to its earnings before interest, tax, depreciation and amortisation margin to 30.7% from 22.2% in the first quarter.

The powerhouse also suffered foreign exchange (forex) losses of RM97bil in the second quarter after the ringgit depreciated against the US dollar by 8.9% in the quarter and against the yen by 21.9%.

President and chief executive officer Datuk Seri Che Khalib Mohamad Noh said the forex losses posted in the second quarter were a big improvement from the RM1.4bil forex losses posted in the first quarter ended Nov 30.

For the six months ended Feb 28, TNB posted a net loss of RM269.5mil against a net profit of RM2.57bil previously mainly from the higher operating expenses and forex loss of RM1.56bil incurred in the first quarter. Revenue for the period was lower at RM12bil from RM14.3bil a year ago.

In the results briefing yesterday, TNB chairman Tan Sri Amar Leo Moggie said the weaker performance was affected by lower electricity demand growth, higher fuel costs and the depreciation of the ringgit against the US dollar and yen.

Nevertheless, he said, the group was still on track to achieve its headline key performance indicators.

He said the group had also revised its return on assets (ROA) to 3.7%. Its actual ROA achieved for the financial year ended Aug 31, 2008 (FY08) was 4.6%. To a question, Che Khalib said the March figures for power demand were stabilising from the steep drop in the first two quarters.

“The second quarter was a frightening period for us but demand is creeping up again but very slowly. We still expect power demand in the second half to be lower than in (the second half of) FY08, but I don’t think it will be a drastic reduction. It will be quite flat,” he said.

Electricity demand contracted by 9.2% in the second quarter from the first quarter, hit by a sharp fall in industrial consumption as factories shuttered for the Chinese New Year celebrations.

Che Khalid expects full-year earnings (FY09) to be lower than FY08 even as coal prices remain stable in the next three months. He said earnings in the third and fourth quarters may be similar to the second quarter.

He expects coal prices to average US$85 per tonne this year. TNB’s coal costs averaged US$100 per tonne in the first quarter. Although the group has locked in all the volume for its coal requirement for this year, it has yet to lock in the price.

Commenting on the Bakun project and tariff review, which is due in July, Che Khalid said: “The new Cabinet is only one week in office. It is only fair to give them some time to settle in. We are hoping to meet them by end of this month.

“You’re (the media) very presumptuous that the tariff will go up. The tariff could go up or down in July depending on the review and fuel prices.”

Asked if he was hinting that the tariff would go down, he asked the media not to speculate.

He said the group would retire some of the dollar bonds if there was an opportunistic purchase.

“We do not have any bonds retiring this year,” he said, adding that TNB had cash to retire its bonds.

 
TENAGA :  [Stock Watch]  [News]


For latest Bursa Malaysia indices, charts and other information click here

  • E-mail this story
  • Print this story