First Gen posts lower profit last year

Danessa Rivera (The Philippine Star) - March 17, 2018 - 12:00am

https://www.philstar.com/business/2018/03/17/1797393/first-gen-posts-lower-profit-last-year

MANILA, Philippines — Lopez-led First Gen Corp. reported lower profit and flat recurring earnings in 2017 due to weak spot market prices and damage to its geothermal and hydroelectric platforms after a major earthquake hit Leyte.

However, the company said it is gearing up its core business to strengthen its lead position in developing the country’s low-carbon energy future.

First Gen said its recurring net income attributable to equity holders of the parent stood at $163 million last year, unchanged from the previous year.

Without the non-recurring items, its attributable net income was at $134 million, $29 million lower than the previous year.

The company attributed last year’s performance to the one-time effect of break funding costs incurred as a result of a $500-million refinancing of the 1,000-megawatt (MW) Santa Rita power plant’s long-term debt in May.

It also cited the premiums paid for First Gen and subsidiary Energy Development Corp.’s (EDC) partial buyback of dollar-denominated bonds.

EDC also incurred earthquake- and typhoon-related expenditures after natural calamities struck Leyte last year.  Meanwhile, First Gen’s hydroelectric platform also suffered from weak spot market prices.

In terms of revenues, the company reported a nine percent increase from the sale of electricity from $1.71 billion to $1.56 billion.

Of the total, the natural gas portfolio accounted for 61 percent. EDC’s geothermal wind and solar revenues accounted for 37 percent, while First Gen Hydro Power Corp. cornered only two percent.

“The flat earnings growth does not reflect the many noteworthy achievements of 2017 that strongly positions the company to develop a cost-competitive and flexible platform. This platform is best prepared to both enable and address a low-carbon energy future,” First Gen president and COO Francis Giles Puno said.

FGen’s platform consists of four natural gas-fired power plants: the 1000-MW Santa Rita, the 500-MW San Lorenzo,97-MW Avion peaking and 414-MW San Gabriel mid-merit gas power plants.

Its subsidiary FG Hydro owns and operates the 132-MW Pantabangan-Masiway hydroelectric power plant complex (PMHEP) located in Nueva Ecija.

Another subsidiary, EDC, owns and operates several geothermal power plants as well as a wind and solar power plant. It has 12 integrated geothermal power stations across Leyte, Bicol, Negros Island and North Cotabato, while its wind and solar farms are located in Burgos, Ilocos Norte.

“On our clean low-carbon gas platform, we closed out the residual technical issues in operating the 420-MW San Gabriel flex plant and the 97-MW Avion peaking plant in the first half of 2017,” Puno said.

For this year, the company expects improved performance after closing power contracts for some of its assets, as well as higher spot market prices.

“2018 is already off to a good start as the San Gabriel contract with Meralco has already been signed, while the ERC has provisionally approved FG Hydro’s ancillary service contract,” Puno said.

“San Gabriel and Avion have been running at high dispatch levels and benefitting from higher electricity prices at the wholesale electricity spot market (WESM) as a number of older baseload plants are going through maintenance in preparation for the hot summer months. Moreover, EDC’s Leyte projects are on their way to a full recovery,” he said.

The company is also looking to participate in the government’s plan to make the country a trading and trans-shipment hub through the development of a liquefied natural gas (LNG) terminal.

“First Gen is also progressing with the site preparation of its LNG regasification terminal to be located in its First Gen Clean Energy Complex in Batangas. The LNG facility will ensure the continued supply of natural gas for all of its gas-fired power plants,” Puno said.