This was a 14% year-on-year drop in net profit as higher foreign currency translation losses, finance cost and prosperity tax (cukai makmur) weighed on earnings.
Its operating profit rose 21.5% to RM7.91 billion from RM6.51 billion following a 47% growth in revenue to RM19.07 billion from RM12.98 billion, according to TNB’s filing with Bursa Malaysia today.
Its earnings per share for the quarter stood at 15.50 sen from 17.57 sen a year ago, and no dividend was declared.
Revenue was driven mainly by higher under-recovery of imbalance cost pass-through (ICPT) of RM6.11 billion compared to the previous corresponding period’s RM1.31 billion. Operating expenses increased 51.2% year-on-year mainly due to higher generation cost.
The group’s receivables expanded to RM22.3 billion in the quarter, up 16.3% from RM19.17 billion in Q2.
For the first nine months of this year (9M 2022), its net profit fell 4.7% to RM2.65 billion from RM2.78 billion in the previous corresponding period, despite revenue rising by 46% to RM53.87 billion from RM36.89 billion.
The reduced profit was mainly due to higher foreign currency translation losses, finance cost and tax expenses which include the prosperity tax for FY2022.
TNB president and CEO Baharin Din said the under-recovery of the ICPT for the 9M 2022 surged to RM15.92 billion from RM1.3 billion in the same period last year due to the current high fuel price environment.
Given the current high fuel price cost environment, the ICPT mechanism under the incentive-based regulation (IBR) allows TNB to remain neutral as it allows the group to pass through any variations in generation cost in the form of rebates or surcharges.
The ICPT is a six-month pass-through mechanism of variations in uncontrollable fuel cost and other electricity generation-specific costs incurred by the utility for the preceding six-month period.
For the ICPT recovery period from July to December 2022, the government has agreed to reimburse TNB the ICPT cost amounting to RM5.8 billion. “We have received to date a total of RM4.8 billion ICPT cost recovery for July to November 2022 claims from the government,” said Baharin.
Amid a challenging global environment, overall growth is expected to normalise in 2023. Taking into account the challenging business environment currently, the group anticipates a “reasonable performance” for this year.
Nevertheless, it remains cautious and has taken prudent measures in terms of its operational and financial requirements to ensure it remains resilient, TNB added.
On initiatives supporting its energy transition, Baharin said TNB is accelerating its efforts by retiring selected coal plants earlier than planned and repowering fossil-fired power plants with new green technology.
“In August, we announced our intention to work with Petronas on joint feasibility studies in the areas of hydrogen and carbon capture with a view to unlock the commercial value of at least RM10 billion up to 2035.”
It has also received a letter of intent from the government for the development of a 2,100 MW combined cycle power plant in Kapar, Selangor. The new gas-fired power plants will be developed with future hydrogen technology as an alternate fuel to gas, he added.