TNB’s Q3 profit tumbles

PETALING JAYA: Tenaga Nasional Bhd's (TNB) net profit for the third quarter ended May 31, 2015 slumped 51.48% to RM789.4 million compared with RM1.63 billion in the previous corresponding period, mainly due to recognition of the imbalance cost-pass through (ICPT) over-recovery of RM1.82 billion.
Revenue also fell 13.86% from RM11.5 billion to RM9.91 billion.
In a filing with the stock exchange, the national utility giant said the ICPT over-recovery was for the period of January 2014 to May 2015.
"The reporting of the over-recovery amount in TNB's financial statements for the first time was done after a thorough review and deliberation between TNB and the relevant parties," it noted.
However, TNB chairman Tan Sri Leo Moggie said the effective implementation of the ICPT under Incentive-Based Regulation (IBR) framework since Jan 1, 2014 has enabled the company to record stable earnings by minimising its exposure to fluctuations in generation and fuel costs.
"Moving forward, TNB expects continued earnings stability as a result of its neutral exposure to these fluctuations. This earnings visibility is welcomed by the company.
"At the same time, under the ICPT mechanism, any savings from lower generation costs resulting from the decline in global fuel prices have been passed back to consumers in the form of tariff rebates, as announced in February and June 2015," he added.
Nevertheless, he said TNB continues to be impacted by uncertainties in the global economic environment and the depreciating ringgit.
The group registered sales of electricity of RM10.82 billion against RM10.61 billion, driven by a 2.4% or RM241.4 million growth in the Peninsular Malaysia.
TNB said it had taken note of Bank Negara's monetary policy statement dated July 9, which recognises that there are heightened risks to global growth and financial conditions which may have implications on macroeconomic stability and the prospects of the Malaysian economy.
"Given the said prevailing global economic environment and continuous foreign exchange volatility, the board remains cautious on the group's prospect for the financial year 2015," it added.
For the nine-month period, TNB saw its net earnings slightly up 3.65% to RM5.3 billion against RM5.11 billion in the same period last year. This was on the back of a flat revenue of RM31.54 billion compared with RM31.07 billion.