KUALA LUMPUR: Tenaga Nasional Bhd (TNB) foresees a reasonable performance for the year 2023 and will continue to remain cautious on its earnings exposure to fuel prices and currency volatility.

“The group will continue to take prudent measures in managing its operational and financial requirements to ensure it remains resilient,” the utility giant said in a filing with Bursa Malaysia.

TNB said it reported a “fair performance” despite the challenging environment for the period ended June 30.

The electricity demand growth recorded at 2.0% was in line with Malaysia’s gross domestic product (GDP) expansion of 2.9% in the second quarter of 2023, however, earnings was impacted by negative fuel margin and foreign exchange volatility.

“Declining coal prices globally has alleviated the pressure on the group’s cash flow position. This, coupled with stronger collection rate, have contributed to a favourable accounts receivable movement and a stronger working capital position,” TNB said.

In the second quarter ended June 30, TNB’s net profit tumbled 62.4% to RM327.9mil, or earnings per share of 5.70 sen from RM872.2mil, or 15.23 sen a year earlier.

The lower profit was due to negative fuel margins and foreign exchange translation losses in the current quarter.

Revenue, however, increased to RM13.3bil from RM12.8bil, resulting from higher sales of electricity by 3.5% or RM434.2mil.

Operating profit for the current quarter decreased by 28.9% or RM759.6mil due to the lower ICPT under recovery recognised in the current quarter of RM2.86bil as compared to RM6.3bil in the last corresponding quarter, offset by lower operating expenses of RM2.3bil.

For the first half, TNB posted a net profit of RM1.33bil, down 24.6% from RM1.76bil last year while revenue expanded 3.8% to RM25.9bil against RM24.9bil a year prior.

The board of directors has approved an interim single tier dividend of 18.00 sen per share, on 5.78 billion ordinary shares for the financial year ending Dec 31, 2023 amounting to RM1.04bil.

TNB said the books closure and payment dates will be announced in due course.