First Holdings expects 2011 net income to fall by a third

Manila Times.net

LOPEZ-LED First Philippine Holdings Corp. expects earnings to fall by a third this year because of the rehabilitation of a subsidiary’s geothermal plants, the shutdown of another unit’s pipes, and the absence any one-time gain such as that coming from the sale of its shares in Manila Electric Co. (Meralco).

During the company’s annual stockholders’ meeting, Elpidio Ibañez, First Holdings president, said its recurring earnings will be negatively affected in the short term because it has discontinued recognizing equity in net earnings in Meralco shares.

Last year, the company recognized a P23.6-billion gain on sale of its Meralco shares, pushing First Holdings’ net income attributable to equity holders of the parent to P24.85 billion from P8.73 billion in 2009.

First Holdings’ net income attributable to the parent fell 98 percent to P567 million in the first three months of 2011 from P24.65 billion in the same period last year.

The conglomerate also programmed P8.8 billion in capital expenditure this year primarily for units Energy Development Corp. (EDC) and First Philec Solar.

“EDC will forego revenues and incur higher operating expenses as it undertakes the augmentation and rehabilitation of some of its geothermal steam field and power plants to achieve optimal performance levels,” Ibañez said.

EDC will spend P6.8 billion for the rehabilitation of the 192-megawatt Palinpinon and 112-megawatt Tongonan plants as well as the Bacon-Manito plants, which are expected to deliver 130 megawatts of generating capacity in 2012.

Another factor contributing to First Holdings’ slower growth is the continued shutdown of the pipeline of First Philippine Industrial Corp. “until we can assure the authorities and ourselves that we can operate it safely,” Ibañez said.

First Holdings said the clean up of the leak that was discovered in a pipeline in Barangay Bangkal, Makati will last three to four years.

First Philec also will earmark P2 billion for the expansion of its solar wafer slicing operations. It recently signed a joint venture agreement with Nexolon of Korea to put up a 400-megawatt solar wafer slicing facility in First Philec’s industrial park in Batangas. The plant would commence operation in the third quarter.

First Holdings shares were unchanged at P63 each on Monday.KRISTA ANGELA M. MONTEALEGRE