Only recently, 1 November 2013, a business press report told us how well TNB had performed in 2013.
The profit would have been even more than RM4.6bn if not for forex losses in the fourth quarter. In TNB’s fourth quarter 2013 financial statement, it was stated, “Additionally, the weakening of Ringgit against the US Dollar and Japanese Yen during the quarter under review has resulted the Group reported a huge loss in foreign currency translation of RM617.7 million as compared to a gain of RM324.7 million recorded in the last quarter.”
And this is how the whole year’s financial result was reported. This excerpt was from a Business Times report titled Bright FY2013 for TNB:
STRONG RESULTS: Group-level revenue hits mind-boggling RM37.13b as utility expects steady demand growth
TENAGA Nasional Bhd posted a RM4.6 billion net profit for the financial year ended August 31 2013, up from the RM4.4 billion recorded in the same period last year.
The higher profit ratio was due to better electricity sales in Peninsular Malaysia and Sabah, which grew at 4.3 per cent and 7.3 per cent, respectively.
Group-level revenue came in at a mind-boggling RM37.13 billion from RM35.84 billion previously.
TNB chairman Tan Sri Leo Moggie said for the financial year ending 2014, the electricity demand growth is expected to remain steady, bolstered by the improving global outlook and supported by domestic economic growth of 5.0 to 5.5 per cent, as announced in the 2014 Budget.
He said this after the company, one of the largest capitalised stock on Bursa Malaysia, announced its 12-month financial report card.
Still, 2013 would have been a much better year for TNB, if not for the foreign exchange losses in the last three months of its financial year.
Net profit for the fourth quarter slumped by more than two thirds, resulting in the utility reporting a net profit of RM219.4 million against the RM1 billion in the same period last year.
The forex losses were attributed to the weakening of the ringgit against the US dollar and the Japanese yen at 6.4 and 9.3 per cent, respectively.
The profit before tax and zakat was actually RM5.9bn (RM4.7bn in 2012).
TNB also had a healthy bank balance of RM9.5bn and a net current assets surplus (an indicator of liquidity) of RM9.6bn. Its current assets to current liabilities ratio (known as Current Ratio) is 1.9, well above the 1.0 threshold below which a company would find it difficult to meet its financial obligations. It is not exactly in dire straits.
Meanwhile operating expenses increased by just 1.8 per cent, as stated in the Annual Report 2013: “Countering this, we still incurred additional fuel costs from burning oil and distillate to meet rising electricity demand in FY2013. This contributed to an 1.8% increase in our operating expenses from RM31.31 billion the previous year to RM31.86 billion.”
Return on shareholders’ equity was 13.4 per cent in 2013 compared to 11.4 per cent in 2012.
And the share price has been steadily rising.
So what do you think? Does TNB deserve a 15 per cent tariff increase?
If at all a tariff hike is necessary, an increase in the region of 3-5 per cent would have been more palatable under the circumstances. And TNB should look into plugging inefficiencies and non-revenue electricity lost.