KUALA LUMPUR (Jan 26): Tenaga Nasional Bhd (TNB) saw a 23.6% jump in its net profit for the three months ended Nov 30, 2017, on higher sales of electricity and a gain on foreign exchange.

Net profit for the quarter came in higher at RM2.15 billion versus RM1.74 billion a year ago. Earnings per share grew to 37.98 sen per share from 30.79 sen per share.

“The higher net profit was mainly due to favourable foreign exchange translation, boosted by the strengthening of the ringgit. This indicates positive macroeconomic development in Malaysia, which benefits TNB in terms of electricity demand,” said TNB president and chief executive officer Datuk Seri Azman Mohd in a statement today.

Quarterly revenue climbed 3.3% to RM11.61 billion from RM11.24 billion a year ago, supported by higher electricity sales.

The group recorded RM967 million in return for regulated business under the incentive based regulation (IBR) framework, mainly comprising transmission and distribution businesses.

TNB said its operating expenses for the quarter increased 6.3% year-on-year to RM9.66 billion, contributed by higher generation cost from fuel cost escalation, but the imbalanced cost pass through (ICPT) mechanism has shielded the group from fluctuation in fuel prices.

“The stability of the group's earnings was underpinned by the effective implementation of the ICPT mechanism under the IBR framework. The earnings stability is crucial to ensure that TNB has the capability to continuously invest in the nation’s infrastructure, to ensure system efficiency, security and reliability,” said Azman.

The group said it invested substantially in capital expenditure during the quarter and had invested about 71% of its RM3.71 billion allocation for the quarter for three projects with almost 3,500 megawatt capacities to be commissioned between 2018 and 2020.

Going forward, the national utility company expects electricity demand growth to be stable, in line with the positive economic outlook for Malaysia.

“Bank Negara Malaysia in its third quarter report indicated that given the continued strong performance in the third quarter, the Malaysian economy is on course to register growth that is close to the upper range of the official projects of 5.2% to 5.7% for 2017.

“Therefore, it is expected that the unit electricity demand growth will be stable in line with the above. Given the aforementioned scenarios, the board of directors expects the result of the group for the period ending December 2017 to remain stable,” said TNB.

TNB shares closed down 2 sen or 0.13% at RM15.84 today, giving it a market capitalisation of RM89.75 billion.