KUALA LUMPUR, Jan 20 — Malaysia’s biggest power producer, Tenaga Nasional, returned to profit in the first quarter as power demand rose in line with increased economic activity and coal prices stabilised.
Foreign exchange uncertainties, in particular for the dollar and the Japanese yen, and rising prices for coal will have an impact on the company’s performance this financial year, the state-owned company said today.
Tenaga’s average coal cost for the quarter was around US$80 (RM272) per metric tonne, said Che Khalib Mohamad Noh, Tenaga’s chief executive officer
.
Coal prices based on the Barlow Jonker Index, a measure of spot export thermal coal prices, have risen to around US$99 per metric tonne this year after averaging around US$72.30 late last year.
“Coal prices are really shooting up, so I think we have to be prepared that (our) coal (costs) will rise,” Che Khalib told reporters at the results briefing.
Tenaga has locked in half of its coal requirement for the 2010 fiscal year at US$65-US70 per metric tonne, while the remainder will be secured at spot prices, he said.
Analysts said higher coal costs may strengthen Tenaga’s case for a tariff hike, which the government must review every three years.
Che Khalib said Tenaga and the government are still negotiating a tariff review due this month.
Tenaga, valued at almost US$11 billion, posted a net profit of RM706.3 million for the September to November period, against a loss ofRM944 million a year earlier. The year ago figure included a RM1.44 billion foreign exchange translation loss.
Analysts do not provide quarterly earnings forecast for Malaysian companies, but Tenaga’s first-quarter net profit accounted for 25 per cent of analysts forecast of RM2.8 billion for the full year.
“The first quarter saw an improvement in electricity demand growth by 2.7 per cent in Peninsular Malaysia,” Tenaga said in a statement.
Operating costs fell 6.1 per cent in the first quarter due to lower generation costs, it said. Most of Tenaga’s power generation comes from gas, which is subsidised by the government.
Tenaga shares closed down 0.1 per cent at RM8.16 today. The stock gained 34 per cent last year, lagging the broader market’s 45 per cent rise.
Seventeen out of 21 analysts tracked by Thomson Reuters I/B/E/S have either a “strong buy” or “buy” rating on Tenaga. — Reuters
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