Powering Ahead: Unpacking the Latest Quarterly Performance of Malaysia’s Energy Giant
Greetings, fellow investors and market watchers! Today, we’re diving deep into the recently released first-quarter financial report for the period ended 31 March 2025, from Malaysia’s leading utility company. This report provides a crucial look into the company’s operational health and strategic direction amidst a dynamic energy landscape. Get ready to uncover the key figures, understand the drivers behind the performance, and explore what the future holds for this cornerstone of the Malaysian economy.
The company has delivered a robust performance in Q1 FY2025, showcasing significant growth in both revenue and profit. This positive momentum is underpinned by strategic adjustments and improved operational efficiency, despite ongoing market complexities. A notable highlight includes a substantial 53.5% surge in profit for the period compared to the same quarter last year.
Q1 FY2025 Financial Highlights: A Strong Start to the Year
Let’s break down the core numbers that tell the story of the company’s first quarter:
Revenue
Q1 FY2025: RM16,038.7 million
vs. Q1 FY2024
RM13,640.4 million
+17.6% increase
The impressive 17.6% increase in revenue, amounting to an additional RM2,398.3 million, was primarily driven by a 17.5% rise in electricity sales. This growth is largely attributed to other regulatory adjustments under the Incentive Based Regulation (IBR) framework. Furthermore, the Imbalance Cost Pass-Through (ICPT) moved into an over-recovery position of RM175.2 million, a significant shift from an under-recovery of RM2,353.0 million in the previous corresponding period, thanks to lower fuel prices.
Operating Profit
Q1 FY2025: RM2,321.7 million
vs. Q1 FY2024
RM2,024.8 million
+14.7% increase
The company’s operating profit saw a healthy 14.7% increase, or RM296.9 million. This improvement reflects better margins, mainly due to lower operating expenses and a reduced net impairment loss on financial instruments, indicating better collection from customers.
Profit Before Taxation and Zakat
Q1 FY2025: RM1,554.2 million
vs. Q1 FY2024
RM1,029.8 million
+51.0% increase
Profit for the Period (Net Profit)
Q1 FY2025: RM1,040.8 million
vs. Q1 FY2024
RM677.9 million
+53.5% increase
The net profit for the period soared by 53.5%, reaching RM1,040.8 million. This significant jump was primarily driven by the improved margins mentioned earlier, coupled with a favourable foreign exchange translation gain in the current period, a reversal from a loss in the corresponding period last year. However, this was partially moderated by a higher tax expense, as the Group no longer benefits from reinvestment allowance shelters.
Basic Earnings Per Share
Q1 FY2025: 18.20 sen
vs. Q1 FY2024
12.37 sen
+47.1% increase
The strong profit growth translated directly into a significant increase in earnings per share, reflecting enhanced shareholder value.
Operational Performance & Geographical Footprint
Delving deeper, electricity sales remain the primary revenue driver, contributing the lion’s share. The company’s revenue streams are diverse, with contributions from goods and services, construction contracts, and customer contributions. Geographically, Malaysia continues to be the dominant market, though the Group maintains a presence in the United Kingdom, Kuwait, Republic of Ireland, and Australia, with Kuwait showing a remarkable increase in revenue contribution.
| Revenue by Location | Q1 FY2025 (RM million) | Q1 FY2024 (RM million) |
|---|---|---|
| Malaysia | 15,678.1 | 13,403.6 |
| United Kingdom | 156.6 | 181.3 |
| Kuwait | 158.3 | 21.8 |
| Republic of Ireland | 20.6 | 11.2 |
| Australia | 7.5 | 9.9 |
| Other countries | 17.6 | 12.6 |
| Total Revenue | 16,038.7 | 13,640.4 |
Cash Flow and Financial Health
From a cash flow perspective, the Group generated robust cash from operations, recording RM5,971.5 million in Q1 FY2025, a significant increase from RM4,674.4 million in the corresponding period last year. This strong operational cash generation is a positive indicator of the company’s ability to fund its activities and investments. As of 31 March 2025, total net assets stood at RM61,999.8 million, with total equity at the same figure, indicating a solid financial foundation.
Regarding dividends, the Board of Directors has not recommended any dividend for the quarter ended 31 March 2025. However, it’s worth noting that the final single-tier dividend for Financial Year 2024, totaling RM1,511.4 million, was paid on 16 April 2025, demonstrating the company’s commitment to shareholder returns from its previous fiscal year’s performance.
Navigating Risks and Forging Ahead: Prospects for the Future
The Group’s performance in Q1 FY2025 demonstrates a stable trajectory, bolstered by higher demand from the commercial sector and Malaysia’s healthy GDP growth of 4.4%. The rollout of Incentive Based Regulation Period 4 is expected to further strengthen the regulated business and the Group’s overall financial position.
Despite the positive outlook, the company acknowledges the prevailing geopolitical uncertainties. Nevertheless, it expects to maintain a resilient performance throughout 2025 by upholding rigorous operational and financial discipline. The Group remains steadfast in its commitment to the National Energy Transition Roadmap, aiming to foster sustainable growth and create lasting value for its stakeholders.
Summary and
While the first quarter results paint a generally optimistic picture, it’s crucial for investors to be aware of certain ongoing challenges. The company’s management has highlighted its focus on operational efficiency and strategic growth, which are commendable, but external factors and legal proceedings warrant close attention.
Key risk points to monitor include:
- Reinvestment Allowance (RIA) Litigations: Tenaga Nasional Berhad (TNB) is embroiled in significant tax disputes with the Inland Revenue Board (IRB) regarding Reinvestment Allowance claims for various Years of Assessment (YAs 2013-2018, 2020, 2021). The potential tax liability, after penalty remission, stands at RM6,810.7 million, with an estimated net cash outflow exposure of RM5,053.5 million. While TNB’s directors, based on legal advice, believe no provision is required, the outcome of these ongoing appeals (including a Federal Court judgment awaited for YA 2018) could have a material impact. Similar disputes also affect its subsidiaries, Southern Power Generation Sdn Bhd (SPG) and TNB Western Energy Berhad (TNBWE).
- Geopolitical Uncertainties: The report explicitly mentions geopolitical uncertainties as a factor that could influence the Group’s performance. While the company aims for resilience, global events can impact fuel prices, supply chains, and overall economic stability.
- Regulatory Landscape: While the IBR framework is seen as a positive, changes in regulatory policies or the energy transition roadmap could present both opportunities and challenges that require adaptive strategies.
The company’s strong Q1 FY2025 performance, driven by increased demand and strategic operational improvements, provides a solid foundation. Its commitment to the National Energy Transition Roadmap positions it well for long-term sustainable growth. However, the resolution of the significant tax litigations and the management of external geopolitical factors will be critical determinants of its future financial trajectory.
What are your thoughts on this quarter’s results? Do you believe the company can maintain this growth momentum in the face of ongoing challenges, especially with the pending tax litigation outcomes? Share your views and insights in the comments below!
