FGen's H1 Income Declines 85%

Manila Bulletin

By MYRNA M. VELASCO

August 17, 2011, 2:39am

MANILA, Philippines — The consolidated net income of Lopez firm First Gen Corporation was down 85.1 percent to $11.2 million in the first half from $74.9 million in the same period last year.

But if referenced mainly to the parent company, First Gen logged an attributable net loss of $13.3 million, a 126.6 percent cut from the previous year's income of $63.3 million.

The company traced the not-so-favorable performance in the first half to the lower equity in net earnings of subsidiaries, chiefly to the P2.3 billion net loss posted by Energy Development Corporation (EDC) because of the P5 billion impairment charge it booked for the shutdown of its Northern Negros Geothermal Power facility.

First Gen indicated that the provision for full impairment had a net effect of $45.8 million on its balance sheet, qualifying further that "EDC's income was also brought down by the absence of the reduction in allowance for doubtful accounts on input VAT (value-added tax) claims that was recognized in 2010."

These have been compounded by foregone steam sales following the acquisition of the BacMan (Bacon-Manito) plants, and higher interest and financing charges due to the increase in outstanding loans availed during the period."

The Lopez firm similarly reiterated the lower revenues it fetched from its Pantabangan-Masiway hydro plants due to generally lower trading prices at the Wholesale Electricity Spot Market.

The decline in earnings from assets, however, was offset by the company's lower interest expenses and the various gains it made at its ongoing fiscal management strategy.

The listed firm's revenues from sale of electricity went up slightly by 5.8 percent to $633.7 million or $34.6 million higher from the previous year's $599.2 million.

It explained that this was "due to a combination of higher dispatch from the Santa Rita and San Lorenzo plants and an increase in the prices of natural gas."

The recorded dispatch levels for the gas plants had been at average 88.1 percent as of June 2011 as compared to 79 percent in the same period last year.

The two gas plants contribute a significant portion of the generated electricity being wheeled to customers in the Luzon grid. They are covered by long-term power purchase agreements with the country's power utility giant Manila Electric Company. (MMV)