by - May 07, 2021
Semirara Mining and Power Corp. (SMPC), a publicly traded integrated energy firm, expect some profit recovery this year, owing to improved coal and power demand and costs.
SMPC chairman and CEO Isidro Consunji said at the company's virtual stockholders' meeting that the company's bottom line will boost as the coal and energy markets rebound from last year's historic lows.
“To take advantage of the upswing, we will capitalize on our COVID-19 resiliency and adaptation strategy of focusing on our people, finances, and execution skills. However, given our operational headwinds and until our country reaches herd immunity, it is unlikely that we will return to our pre-pandemic profit level this year,” he said.
The business ended in 2020 with a combined net income of P3.3 billion, down 66% from P9.6 billion the previous year.
Revenues dropped 36.2 per cent to P23.3 billion as coal production, sales, and prices fell, while energy sales fell due to low power rates and Southwest Luzon Power Generation Corp's (SLPGC) expected and unplanned outages.
The coal division of SMPC and the SLPGC plants will be the key drivers of development this year.
With remedial steps introduced in Molave North Block 7 (NB7), the coal industry is expected to reach 13 million metric tons, according to SMPC president and COO Maria Cristina Gotianun.
“This year, we expect our coal business to perform better on the back of recovering consumption and prices. The remedial measures we have been implementing since December have also allowed us to steadily normalize production. Now that the water seepage at NB7 has gone down to manageable levels, we expect annual production to hit 13 million metric tons,” she said.
Due to excessive water seepages, SMPC postponed mining operations in Molave NB7 in early December, reducing coal output by 13% to 13.2 million metric tons.
SLPGC is expected to drive profits in SMPC's power market due to higher sales, but Sem-Calaca Power Corp. (SCPC) is expected to produce poor performance.
SCPC is the owner of the Calaca coal-fired power plant in Batangas, which it bought from the government in 2009 for $362 million. In the same location, SLPGC operates a 2x150-MW coal power plant.
“For this year, we expect uneven results from our power subsidiaries. SLPGC is set to stage a strong profit recovery because of higher plant availability and better spot market prices. Unfortunately, SCPC is likely to deliver disappointing results because of the forced outage of its Unit 2 beginning Dec. 3 last year,” Gotianun said.
SCPC's outage was triggered by a seven-month-old generator stator failing. Repairs are currently being negotiated with generator provider GE, according to Gotianun.
“While they have agreed to cover the majority of the costs related to fixing the equipment, we are intent on making them shoulder all the necessary expenses. We expect to complete our negotiations within the year,” she said.
“In the meantime, we are doing our best to fast track the repair of the generator. If all goes well, Unit 2 can be up and running by the third quarter of this year,” Gotianun said.
This year, SMPC will invest P4 billion to rebound from last year's slump. The overall sum will be divided between SCPC and SLPGC for their prevention and repair services, with P2.9 billion going to buy mining and service equipment for the coal industry.
Since the COVID-19 pandemic placed a burden on the company's liquidity last year, the management agreed to delay P3.7 billion of CAPEX to this year as part of its cash saving steps.
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