TNB ends FY19 on strong footing, declares highest dividend payout

The turnaround exercise of assets in Turkey and India leads to profitable contributions from the associates, says president


TENAGA Nasional Bhd (TNB) ended its financial year 2019 (FY19) on a high note, having declared its highest dividend payout to date due to lower impairments and positive contributions from its international subsidiaries.

Its president and CEO Datuk Seri Amir Hamzah Azizan (picture) said the turnaround exercise of assets in Turkey and India led to profitable contributions from the associates.

TNB’s investment in Turkey (GAMA Enerji AS), in which TNB owns 30% equity interest, has shown overall operational performance improvement resulting in higher earnings.

TNB posted a net profit of RM653.3 million for its fourth quarter ended Dec 31, 2019 (4Q19) from a net loss of RM134.3 million a year ago.

Revenue for the quarter, however, dropped 2.95% year-on-year (YoY) to RM12.18 billion.

TNB board has approved a final single-tier dividend of 20 sen per share, raising the single-tier dividend total to 50 sen per share for FY19.

In addition, the board of directors also approved a special dividend of 50 sen per share, bringing the total dividend per share to RM1, amounting to RM5.69 billion for this financial year. This marks TNB’s highest dividend payout to date.

Following impairments taken out on TNB’s asset in India (GMR Energy Ltd) in 2018, the company is undergoing a restructuring, primarily through asset monetisation. There were no further impairment for GMR Energy in 4Q19.

“GMR Energy also successfully completed the sale of three of their assets, in line with TNB’s intention to optimise its existing assets and sustainably grow a value-driven international portfolio,” Amir Hamzah said in a statement last Friday.

As for TNB’s UK investments, Amir Hamzah expressed confidence of continued improvement in performance, exceeding earlier expectations.

“We foresee some potential upside in 2020 due to technology enhancement initiatives that we are currently undertaking,” he said.

TNB owns two renewable energy companies in the UK, namely Vortex Solar UK Ltd (50% stake) and Tenaga Wind Ventures UK Ltd (80% stake).

Moving forward, TNB will continue to strive for operational excellence on the international front as a key driver of its strategic transformation plan “Reimagining TNB”, added Amir Hamzah.

For the cumulative 12 months, TNB’s net profit jumped 21.63% YoY to RM4.53 billion.

In FY18, the group recognised an impairment of RM802.7 million on its investment in associates and for the period ended Dec 31, 2019, an impairment of RM198.3 million was recognised.

The group recorded a foreign currency translation gain of RM200.6 million against a loss of RM393.1 million for FY18, it said in a Bursa filing last Friday.

TNB added that during 4Q19, the group experienced prolonged forced outages of coal plants namely TNB Janamanjung Sdn Bhd and Kapar Energy Ventures Sdn Bhd, which impacted earnings of the group.

“As for the regulated business, the company was able to maintain the approved return on the regulated business under the incentive-based regulation framework of RM3.84 billion,” it said.

Full-year revenue was up 1.08% YoY to RM50.94 billion, consistent with the increase in total sales of electricity.

On prospects, TNB noted that economic growth in Malaysia for 2020, particularly in the 1Q20, will be affected by the Covid-19 outbreak.

“The impact will be felt largely in the tourism-related sectors, and to a certain extent, in the manufacturing sector through disruptions within the global supply chain and expected slowdown in China.

“This will exert additional pressure to the electricity demand growth, primarily in the industrial sector.

“Despite the above-mentioned challenges, the board of directors is of the view that the performance of the group is expected to remain resilient for FY20,” it said.

TNB also announced that chairman Tan Sri Leo Moggie did not request for an extension of contract that ends effective March 12, 2020.

He will also relinquish his chairmanships/directorships in the respective subsidiaries within TNB group of companies.

Tan Sri Ahmad Badri Mohd Zahir has been appointed as the new chairman, non-independent non-ED of TNB for a period of three years with effect from March 12, 2020, TNB stated.

Ahmad Badri is the current secretary general of Treasury, Ministry of Finance.

TNB’s shares closed 3.2% or 40 sen lower to RM12.10, valuing the company at RM68.81 billion.