TNB posts weaker profit on impairment loss, higher tax

KUALA LUMPUR: Tenaga Nasional Bhd’s (TNB) net profit fell by about 27 per cent year-on-year to RM1.56 billion in the first quarter ended March 31, 2019, weighed down by a RM279.7 million net loss on impairment of financial instruments and 85 per cent higher tax expenses.

In contrast, revenue rose to RM13.24 billion versus RM12.27 billion previously, mainly due to an eight per cent increase in the group’s electricity sales to RM13.01 billion, it announced to Bursa Malaysia on Tuesday.

The power utility’s basic earnings per share eased to 27.38 sen from 37.41 sen a year earlier.

TNB said the group’s performance was expected to remain stable for this financial year based on the economic outlook.

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“The Malaysian economy growth was moderate at 4.5 per cent in the first quarter 2019 (fourth quarter 2018: 4.7 per cent) driven mainly by the expansion in domestic demand.

“For 2019, growth in the Malaysian economy is expected to remain on a steady path supported by monetary measures by Bank Negara and continued expansion in domestic demand,” it said.

In a press statement, President/Chief Executive Officer Amir Hamzah said given the current economic climate, the group is focusing on strengthening its businesses and position in the countries in which it operates by taking prudent positions on the investments and ensuring that the business models in those countries are on sound footing.

“TNB has taken the bulk of its impairments and is exploring hedging options to mitigate foreign exchange losses as part of its plan to mitigate consequential financial impacts from the investments,” he said.

Specifically, electricity demand in Turkey is expected to rise and the portfolio of assets owned in Gama Enerji AS, is a lucrative one given the generation plant quality and water concession, he said.

Despite facing financial challenges, TNB’s strategic investment team projects positive long-term return on the investment.

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On investments in India, he said they have shown affirmative potential for growth as the utilisation of electricity in the country is projected to intensify.

The country is also opening doors to new and upcoming power projects to cater for the large demand volume of energy there, he added. – Bernama

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