RM454mil Q4 loss for TNB

STAR, 29 October 2011
KUALA LUMPUR: Tenaga Nasional Bhd (TNB) posted a net loss of RM453.9mil for the fourth quarter ended Aug 31 due to higher fuel costs, its second consecutive quarter of losses as widely expected by analysts.

The company reported a net profit of RM555.2mil in the same corresponding period a year ago. Loss per share was 8.33 sen compared with earnings per share of 10.22 sen.

Revenue, however, was 13% higher at RM9.12bil in the fourth quarter from RM8.07bil previously.
For the financial year ended Aug 31, 2011 (FY11), TNB's net profit plunged to RM499.5mil from RM3.2bil in FY10. Revenue for the year was higher at RM32.2bil versus RM30.3mil.

The utility giant's cash has also fallen due to the higher cost incurred. As at Aug 31, TNB's cash and cash equivalents stood at RM3.25bil from RM8.01bil a year ago.

In the second half, TNB reported a 31.4% increase in operating expenses mainly from independent power producer (IPP) energy payment and fuel costs due to higher consumption of oil and distillate and higher coal price and consumption. The IPP energy payment and fuel costs for the second half of FY11 increased by RM3.2bil, or 50.5%, from the first half.

It also made a foreign exchange translation loss of RM227mil for the whole of FY11, compared with a gain of RM632.6mil last year.

TNB president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said the losses were mainly due to continued gas shortage resulting in an additional fuel cost of RM2.1bil from oil and distillate.

“TNB has to burn an additional 1.1 tonnes of coal amounting to RM400mil to supplement the lower gas volume,” he said at a briefing to announce its financial performance.

Che Khalib said its additional fuel cost did not factor in the extra coal it had to burn. “It we were to calculate it, the additional fuel cost would be about RM2.5bil.”

“We started FY11 with high coal prices but it was still manageable as the existing tariff structure allows TNB to partially recover the coal cost. However, in the second half of the financial year, TNB was hit by severe gas curtailment resulting in higher utilisation of distillate and oil.

“The cost of generation using these alternative fuels is five times more expensive compared to the cost of using gas,” he said.

To a question, he said TNB was currently in discussion with Petroliam Nasional Bhd (Petronas) to seek some compensation concerning its huge losses due to severe gas curtailment. However, he said no decision had been reached as talks were ongoing. “Some form of compensation is required,” said Che Khalib.

Concurrently, Che Khalib said TNB was also in discussing with its stakeholders, Petronas, the Governemnt and IPPs to resolve the shortfall in gas supply.

“We don't think the industry can go on longer (with the severe gas curtailment). We are having many discussion at the moment.

He was quoted as saying recently that, on average, TNB was getting about 900 million std cu ft per day (mmscfd), far from the usual rate of 1,250 mmscfd.

Che Khalib said it was unlikely for Petronas to fully restore its gas supply. “I think they have their own challenges as well,” he said.

He added that TNB's first quarter results may be “similar” to that of the fourth quarter and expected FY12 to be challenging. “Profitability is still too early for us.”

Separately, Che Khalib said the fuel cost pass-through mechanism had been formulated but there was no indication when it would be implemented.

He expected electricity demand to grow 4% next year. For FY11, electricity demand in the peninsula recorded a growth of 3.1%, driven by the commercial sector.