Published April 16, 2009

Tenaga back in the black with RM675m profit

By PAULINE NG
IN KUALA LUMPUR

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MALAYSIAN power producer Tenaga Nasional has swung back into the black, posting a RM675 million (S$281.4 million) net profit for its second quarter to end-February despite a 7 per cent quarter-on-quarter decline in revenue to RM6.9 billion.

The result was achieved on an 11 per cent drop in operating expenses and a much smaller foreign exchange translation loss of RM97 million.

In the preceding quarter, the national utility registered a RM944 million loss after taking a RM1.44 billion forex translation hit.

Tenaga anticipates profit for the next two quarters to come in at around RM600 million.

It does not expect huge translation losses as it believes the ringgit should not weaken beyond its 3.7 to the US dollar point in its first fiscal quarter.

It also anticipates a moderation in the sharp fall in electricity demand, which contracted 9.2 per cent quarter-on-quarter in Q2.

Over the past two fiscal quarters, power demand from the industry sector declined 9.4 per cent year-on- year.

January and February were particularly poor months, with demand plunging 15.3 and 27.5 per cent respectively, before moderating to 16.1 per cent in March.

Unit sales to the petrochemical and iron and steel sectors were 39 and 29 per cent lower respectively.

In West Malaysia, overall demand in the first six months fell 3.2 per cent.

'We still expect demand to be negative over the coming months but don't see it going down any more (to February levels),' company president and chief executive Che Khalib Mohamad Nor said at a briefing yesterday.

Lower coal prices in the second quarter contributed to a lower average contracted price of US$100 a tonne for the first six months, but this was still 87 per cent higher than in the same period last year, when Tenaga posted a RM2.6 billion profit.

For the six-month period, operating expenses were 31 per cent higher.

Tenaga posted a net loss of RM269.5 million despite a 19 per cent increase in revenue. Its Ebitda - earnings before interest, tax, depreciation and amortisation - margin was 26.3 per cent versus 37.1 per cent for the same period previously.

The board has recommended an interim gross dividend of 4.7 sen a share.

The foreign shareholding in Tenaga has fallen to 12 per cent from more than 28 per cent in mid-2007.

Analysts expect the utility's second-half performance to improve and power demand to recover, should the government's pump- priming efforts succeed.