The utility group’s revenue without cost recovery of ICPT for the period increased by 4.4% to RM24.9b from RM23.9b

by S BIRRUNTHA / Pic by HUSSEIN SHAHARUDDIN

TENAGA Nasional Bhd (TNB) posted a resilient first half of 2022 (1H22) financial performance, underpinned by higher electricity demand of 5% year-on-year (YoY) in line with continued post-pandemic economic growth.

The utility group’s revenue without cost recovery of the Imbalance Cost Pass-Through (ICPT) for the period increased by 4.4% to RM24.99 billion from RM23.93 billion.

This was mainly due to the increase in TNB sales of electricity in all sectors, consistent with the overall improvement of Malaysia’s GDP of 6.9% YoY, according to a statement by TNB.

For the second quarter ended June 30, 2022 (2Q22), TNB recorded a higher profit after tax of RM 905.6 million compared to RM871.2 million in 1Q22.

Ebitda was reported at RM10.58 billion, while Ebitda’s margin (without ICPT cost recovery) has improved to 42.3% from 40.6% compared to the same period last year, reflecting an improvement in TNB’s operational performance.

TNB has declared an interim dividend of 20 sen per share for 1H22 compared to 22 sen per share in 1H21.

According to TNB, the declared dividends reflect prudent capital management by the group, resulting in a payout that remains robust relative to the performance of the FTSE Bursa Malaysia KLCI.

The group said the dividend payout ratio for 1H22 stood at 47.3% based on the adjusted profit after tax and minority interests.

The dividend payout for the period amounts to RM1.15 billion.

Meanwhile, TNB president and CEO Datuk Ir Baharin Din commented that the recent announcement of an RM5.8 billion payment and an RM6 billion government guarantee loan facility showed a concerted effort by the government and TNB in addressing the high fuel price situation.

On the substantial growth in receivables due to ICPT in 1H22, Baharin said the group took proactive measures to manage working capital.

“These include fulfilling our obligations to our suppliers and vendors through continuous cash flow monitoring and successfully raising additional borrowings when required.

“We remained prudent in our working capital management and expect our credit rating to remain stable.

“We also improved our collection with an average collection rate of 98% for 1H22 compared to 92% last year,” he noted.

Looking ahead, TNB said it continues to face challenges and remains susceptible to high fuel prices which have resulted in high receivables balances.

It foresees a reasonable performance for the year 2022 while remaining cautious on the prolonged impact of high fuel prices and customers’ credit risk outlook.

The group also said it will continue to take prudent measures in terms of its operational and financial requirements to ensure it remains resilient.

TNB had recently announced its commitment to invest around RM10 billion to RM20 billion per year over the next 28 years as capital expenditure for initiatives to fast-track its Energy Transition Plan that aspires to reduce its emissions intensity to net zero by 2050.

This plan is expected to bring positive business growth to the group.

Baharin said this journey is anchored on ticking the boxes for both environmental, social and governance commitments and business growth for TNB.

“Our fast-tracked initiatives along this transition are driven by a deep sense of responsibility given TNB’s footprint in the country’s energy landscape and a sense of urgency to ensure the sustainability of our business,” he noted.

He also outlined four initiatives to fast-track TNB’s sustainability agenda and these comprised efforts to accelerate decarbonisation to increase the enterprise value of TNB Power Generation Sdn Bhd, expand focus markets to grow TNB’s renewable energy portfolio, continued investments for the grid of the future and focus on electric vehicle ecosystem development.

Shares of TNB closed 23 sen or 2.56% lower to RM8.76 today, giving it a market capitalisation of RM50.4 billion.