EDC net income rises by

Manila Times.net

A THIRD on acquisitions Energy Development Corp. (EDC) increased its profit by nearly a third last year on the back of the full-year operations of the power plants it acquired from the government.

In a financial report, EDC said its net income rose 31 percent to P4.4 billion in 2010 from the P3.4 billion in 2009.

The increase stemmed from the full-year electricity revenues brought in by subsidiary Green Core Geothermal Inc. (GCGI), which operates the 112.5-megawatt Tongonan, Leyte and 192.5-megawatt Palinpinon, Negros
Oriental geothermal power plants.

GCGI took over the plants in late 2009 after posting the winning bid of $220.0 million in a state auction.

With the acquisition of the plants, EDC’s steam and electricity revenue rose to P24.2 billion last year, up 26.9 percent from P19.0 billion in 2009. This was despite an 8.1 percent decrease in sales volume to 7,548.6 gigawatt-hours from 8,214.2 gigawatt-hours over the same period.

“The consistent upward trend in our income results is the product of our two-pronged strategy of driving growth and managing risks. As we completed our acquisition targets and aggressively pursued growth opportunities both in the domestic and international fronts, we also improved our loan portfolio mix with the settlement of the Miyazawa II loan. This further reduced our exposure to the movements of Japanese yen,” Richard Tantoco, EDC president and chief operating officer, said.

EDC’s yen loans accounted for 87 percent and 40 percent of total loans reported in 2008 and 2009.

To mitigate this, the company further brought its yen exposure down to 13 percent as of June 2010 through a number of hedging activities that allowed it to re-denominate bulk of its loan portfolio in pesos.

Besides its geothermal business, EDC’s 122-megawatt hydroelectric power plant in Pantabangan, Nueva Ecija contributed P2.1 billion in electricity revenues from the 348.5 gigawatt-hours sold. This is 71.5 percent better than the P1.2 billion revenues from the previous year due to the completion of refurbishment and upgrade of a unit of the hydroelectric power plant that also increased the power generation capacity by 10 megawatts.

Tantoco said EDC expects to sustain its profit growth this year by improving the efficiency of its geothermal plants.

“We have embarked on a capex program that will achieve optimum availability and reliability for all our operating steam fields and power generating assets. We have also programmed the commissioning of the BacMan power plants by June this year. These investments will certainly sustain the gains we achieved last year and continue yielding more value for our shareholders,” he added.

EDC acquired the BacMan plants, or the Bacon-Manito geothermal power facility, in a state auction held on May 2010.

The geothermal complex had a 150-megawatt power generating capacity but had deteriorated under government ownership.

EDC’s shares fell to P6.17 on Thursday from P6.20 previously.

Euan Paulo C. Añonuevo