Higher Coal Prices to Impact TNB's EarningsPrint this page
Date: 19 January 2011
Kuala Lumpur, 19 January 2011 - Tenaga Nasional Berhad (TNB) today announced a net profit of RM712.9 million, for the 1st Quarter of the Financial Year ending 31 August 2011 (FY2011).
Unit Sales (Peninsula) (Gwh)
Forex Translation Gain/(Loss)
Summary of highlights:
- 6.1% increase in Operating Expenses due to higher coal prices
- 5.3% increase in Group Revenue
- 5.0% Unit electricity demand growth in Peninsular Malaysia
- Net profit of RM712.9 million
- EBITDA margin at 28.5% compared to 29.5% for the corresponding period in FY2010
- Incremental USD10/mt increase in coal prices, would reduce earnings by approximately 18.0%
- Prolonged coal supply disruptions to further increase coal prices
The Group's performance reflects a 6.1% increase in operating expenses mainly attributed to the higher cost of electricity generation from the increase in demand and coal prices. Resulting from the higher operating expenses incurred, the Group reported a lower EBITDA margin of 28.5% as compared to 29.5% reported in the 1st quarter of FY2010. Group revenue recorded a 5.3% increase driven by electricity sales as a consequence of the demand growth of 5.0% in Peninsular Malaysia and 6.4% in Sabah.
Commenting on the Group's electricity demand growth, TNB's Chairman, Y. Bhg. Tan Sri Leo Moggie commented that "analysis of electricity growth year-on-year in Peninsular Malaysia shows demand growth at 5.0% during the 1st Quarter of FY2011, driven principally by the commercial and domestic sectors that recorded demand growth of 7.7% and 9.0% respectively."
The 5.3% increase in the Group's revenue was met by an increase of 6.1% from operating expenses principally from the higher cost of electricity generation. With fuel cost being a pass-through for all IPPs under the Power Purchase Agreements, the Group bears the full cost of higher coal prices and this is reflected in the higher average price of coal incurred during the period of USD95.5/mt, compared to USD79.5/mt in FY2010, reflecting a 20.1% increase over a 12 months period.
TNB's President/Chief Executive Officer, Y. Bhg. Dato' Sri Che Khalib Mohamad Noh elaborated on the operating expenses, in particular the impact on TNB from higher coal prices. He commented that "with generation from coal-fired power plants increasing to 40.2% to meet increasing demand, the higher coal price has increased total operating costs."
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