KUALA LUMPUR (Aug 28): Malakoff Corp Bhd registered a net loss of RM318.73 million or 6.52 sen per share for the second quarter ended June 30, 2023 (2QFY2023), compared with a net profit of RM119.15 million or 2.44 sen per share a year earlier.

The group said the significant decline in earnings was mainly due to substantial negative fuel margins of RM556.2 million and RM14.9 million at Tanjung Bin Power Sdn Bhd (TBP) and Tanjung Bin Energy Sdn Bhd (TBE) coal plants, impacted by higher weighted average fuel costs.

In addition, earnings were also dragged by a lower contribution from GB3 Sdn Bhd following the expiry of the power purchase agreement on Dec 30, 2022, higher operating insurance costs as well as lower share of profit from associates and joint ventures, said the independent power producer (IPP) in a bourse filing.

Revenue increased by 2% to RM2.36 billion from RM2.32 billion in 2QFY2022, primarily due to a higher energy payment and capacity income from TBE given the higher applicable coal price and shorter duration of plant outage as well as higher energy payment from Segari Energy Ventures Sdn Bhd due to an increase in despatch factor.

Notably, this is Malakoff’s second straight quarterly loss. In 1QFY2023, the group recorded a net loss of RM99.1 million on a revenue of RM2.29 billion.

Notwithstanding the poor financial performance, Malakoff declared an interim dividend of 1.5 sen per share, to be paid on Oct 27.

For the first six months of FY2023, the group posted a net loss of RM417.82 million compared with a net profit of RM146.62 million for the same period of FY2022, although revenue improved 10.66% to RM4.65 billion from RM4.2 billion.

Malakoff said it expects a challenging performance for FY2023 due to impact from global coal prices, and will continue to optimise its plants operational efficiencies to cushion the adverse impact.

Malakoff managing director and chief executive office Anwar Syahrin Abdul Ajib said he is confident of the group’s capacity to navigate the challenging conditions, given the group’s steadfast commitment towards decarbonisation and strategic expansion into renewable energy and environmental solutions.

“We are championing one of the National Energy Transition Roadmap (NETR)’s catalyst projects on bioenergy where we will be carrying out biomass co-firing at our existing 2,100 MW TBP plant. The 12-day trial run was successfully conducted in December 2022 and the pilot phase will commence in 2024,” he said in a statement.

“Additionally, we achieved financial closure with RP Hydro in July 2023. This achievement solidifies our commitment to own, operate, and maintain three run-of-river small hydropower plants (SHP) — Kemubu SHP, Kuala Geris SHP, and Serasa SHP. With capacities of 29MW, 25MW, and 30MW, respectively, these facilities collectively provide 84MW of clean energy. They are strategically located in Kuala Krai, Kelantan, underscoring our dedication to sustainable energy solutions in the region,” he added.

Shares of Malakoff finished 1.5 sen or 2.29% lower at 64 sen on Monday (Aug 28), valuing the group at RM3.18 billion.