Tenaga Nasional 1Q net profit rises 22% to RM1.73b

by **Cals** Fri 24 Jan 2014, 16:23

Business & Markets 2014

Written by Cynthia Blemin of theedgemalaysia.com

Friday, 24 January 2014 09:34

KUALA LUMPUR: Tenaga Nasional Bhd posted a 21.8% rise in net profit for the first quarter compared with the previous year on the back of higher electricity sales and lower taxes.

According to a statement to Bursa Malaysia yesterday, TNB said net profit rose to RM1.73 billion for the first quarter ended Nov 30, 2013 (1QFY14) compared with RM1.42 billion in the same period a year earlier.

Revenue for the period was up by 6% to RM9.59 billion from RM9.13 billion a year ago. The utility firm did not declare a dividend for the quarter.

“The quarter recorded sales of electricity of RM9.07 billion against RM8.81 billion for the same period last financial year. The improvement was mainly from sales of electricity in the peninsula and Sabah, which recorded an increase of 3.3% and 1.6% respectively,” TNB said.

The units sold also registered a growth of 2.6% in the peninsula and 1.4% in Sabah compared with the previous corresponding quarter, it added.

During the period, TNB said it recorded a negative 7.2% effective tax rate, which is much lower than the statutory tax rate of 25%. This was mainly due to the use of reinvestment allowance incentive during the current quarter and also reversal of deferred tax provision to reflect the reduction of corporate income tax rate from 25% to 24% as announced in Budget 2014, it said.

Profit attributable to the owners of the company for the quarter under review was RM1.73 billion as compared with RM1.42 billion recorded in the corresponding first quarter last financial year.

The higher profit is due to significant reduction in tax expenses, being the result of reinvestment allowance incentive of RM201.7 million and the reversal of deferred taxation of RM188.7 million to reflect the change in the taxation rate from 25% to 24%, it added.

For the quarter under review, TNB’s operating profit however fell 14% to RM1.52 billion from RM1.76 billion previously due to higher operating expenses incurred during the quarter.

The current quarter also recorded a lower translation gain of RM252.7 million as compared with RM397.4 million reported in 1QFY13 due to the weakening of the ringgit against the Japanese yen.

In a statement, TNB president and chief executive officer Datuk Seri Azman Mohd said the recent pilot implementation of Incentive Based Regulation (IBR) effective Jan 1 would drive cost efficiencies and enhance transparency in the operational, financial and technical performance aspects of the company.

With the implementation of IBR, which is the new electricity tariff setting methodology by the government, TNB anticipates that its fuel cost risks are mitigated, therefore leading to better earnings predictability for the company.

Against this backdrop, it continued to view the prospects for its FY14 “to remain positive”.

Shares in TNB ended 0.17% lower at RM11.50 per share.

This article first appeared in The Edge Financial Daily, on January 24, 2014.