TNB is riding strong on a surge in power demand from industries, especially mushrooming data centres.
PETALING JAYA: Tenaga Nasional Bhd
(TNB) reported its strongest quarterly net profit in more than five years as it sold more electricity to meet the increased demand from industries and households.
Net profit more than quadrupled to RM1.44bil in the second quarter ended June 30, 2024 (2Q24), as compared to RM327.9mil in the previous corresponding quarter.
The last time TNB registered higher quarterly earnings was in 1Q19 at RM1.56bil.
The sole electricity supplier in Malaysia also reported a revenue of RM14.37bil in 2Q24, which rose by 7.8% year-on-year (y-o-y).The top line resulted from higher sales of electricity that increased by 5.7% or RM745.8mil to RM13.75bil.
“Operating profit for the current quarter increased by 19.9% or RM372.5mil mainly due to lower negative fuel margin in the current quarter compared with the last corresponding quarter.
“Profit after taxation for the current quarter under review increased by RM1.24bil, from RM270.9mil reported during the last corresponding quarter to RM1.51bil mainly due to higher operating profit coupled with favourable foreign exchange translation and net finance costs,” TNB said in a filing with Bursa Malaysia.In comparison to the preceding first quarter, TNB also reported a higher profit after tax of RM1.51bil as compared to RM677.9mil.
This represents an increase of RM834.5mil quarter-on-quarter.
This was mainly due to a higher operating profit together with a favourable foreign exchange translation and lower tax expense.
Following the improved profitability, TNB’s earnings per share in the second quarter jumped to 24.95 sen.
The board of directors approved an interim single-tier dividend of 25 sen per share for the financial year ending Dec 31, 2024 (FY24), amounting to RM1.45bil.
The utility giant said the book closure and payment dates would be announced in due course.
The final single-tier dividend for FY23 was paid on April 18, totalling RM1.6bil.
Cumulatively, for the first six months of financial year 2024 (1H24), TNB recorded a net profit of RM2.16bil which increased by 62.4% y-o-y.
Revenue also rose by 7.9% y-o-y to RM28bil.
TNB said electricity sales in 1H24 increased by 6.8% or RM1.72bil to RM27.04bil.
“Demand growth rose by 8.4%, primarily fuelled by the commercial and domestic sectors. The Imbalance Cost Pass-Through (ICPT) mechanism’s under-recovery position fell from RM6.49bil to RM5.18bil over the current period due to lower negative fuel margin.
“Operating profit rose by 8% to RM4.27bil from RM3.95bil in the corresponding period, driven by the aforementioned factors.
“Profit after tax increased to RM2.19bil from RM1.2bil in the corresponding period, an increase of 82.3% or RM988.5mil.
“The rise was primarily due to the higher operating profit coupled with a lower foreign exchange translation losses and lower net finance costs in the current period,” according to TNB.
The group attributed its stronger results to stronger electricity demand growth, better operational performance and efficient capital management.
It said the 8.4% electricity demand growth recorded is aligned with the country’s gross domestic product expansion of 5.9% in the second quarter of 2024.
“With the Malaysian economy projected to grow between 4% to 5% from firm domestic demand, the group anticipates a stable performance for 2024 and will remain cautious on market volatilities while taking prudent measures to ensure it remains resilient.
“The group is committed to play an integral role in supporting the National Energy Transition Roadmap while pursuing business growth,” TNB added.
TNB is riding strong on a surge in power demand from industries, especially mushrooming data centres.
In fact, TNB’s electricity sales already hit a record in the first quarter of 2024 at 31,899 gigawatt hours, driven by two new data centres that have a combined installed capacity of about 600 megawatts (MW).
The strong sales was achieved despite the first quarter being seasonally the weakest quarter in the year.
In June, Kenanga Research said TNB guided for electricity demand growth of 2.5% to 3% in 2024.
“We expect the same growth rate over Regulatory Period 4 (RP4), versus 1.8% during RP3, backed by a strong pipeline of data centre projects.
“TNB guided for nine data centre projects with a total energy demand of 700MW to be completed in 2024.
“So far, two with 535MW energy demand were already commissioned in March 2024, namely Yondr Data Centre and Princeton Digital Group Data Centre, both in Sedenak Tech Park, Johor.” stated Kenanga Research in a June 5 note.
To meet the power demand, TNB has been ramping up its energy capacity, amid the liberalisation of the power generation segment via third-party access.
TA Research noted that TNB is working to bring Manjung 4 Power Plant back online by end-2024.
Recap that Manjung 4 Power Plant experienced an unscheduled outage since December 2023.
On Aug 27, TNB signed power purchase agreements (PPAs) with Malakoff Corp Bhd’s subsidiary, Prai Power Sdn Bhd, and Panglima Power Sdn Bhd.
In a filing with Bursa Malaysia, TNB said Prai Power will continue to operate and maintain a 350MW combined cycle gas turbine (CCGT) facility at Seberang Prai Tengah, Penang, within the vicinity of the Prai Power Station.
Panglima Power, meanwhile, will continue to operate and maintain a 710MW CCGT facility at Teluk Gong, Alor Gajah, Melaka.
