Tenaga Nasional Bhd, Malaysia's biggest power producer, said it had a first-quarter net income of RM712.9 million, or 16.3 sen per share, according to a statement given to reporters in Kuala Lumpur today.

Revenue in the three months ended Nov. 30 was RM7.7 billion, the statement said.

Operating expenses rose 6.1 percent in the first quarter on higher coal prices, which averaged $95.5 per metric tonne, it said.

TNB said profit could fall as much as 20 percent this financial year as the cost of coal used in power stations surges.

Coal has climbed as China and India burn more of the fuel to meet rising energy demand while floods have disrupted mining in Australia, the world's biggest coal exporter.

'Coal prices have gone up quite substantially over the past two months as a result of the flooding in Queensland as well as some parts of Kalimantan,' Tenaga Chief Executive Officer Che Khalib Mohamad Nor told reporters in Kuala Lumpur. 'Demand from the Northern Hemisphere has also gone up because of the cold winter.'

For every $10 a ton increase in coal prices, Tenaga's profitability will be cut by 18 percent, Che Khalib said.

Coal prices may peak at $140 a ton and start easing after February, Che Khalib said.

'Tenaga procures about 8 percent of its coal supply from flood-hit coal mines in Queensland,' Lim Tee Yang, an analyst at RHB Research Institute, wrote in a Jan. 6 report. 'This could force it to seek alternative sources of coal at higher prices.'

Tenaga shares have fallen 3.1 percent this year, compared with the 3 percent increase in the benchmark FTSE Bursa Malaysia KLCI Index. The stock closed unchanged at RM6.49 before the earnings release.

Agencies