First Gen H1 net income slips 7% to $95.3M

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LOPEZ-led First Gen Corporation (First Gen) reported a slight decrease in its net income in the first half of the year due to lower earnings of key subsidiaries Energy Development Corporation (EDC) and First Gen Hydro Power Corporation (FG Hydro).

In a disclosure to the Philippine Stock Exchange (PSE), First Gen said that for the first half, net income attributable to equity holders of the parent fell 7.1 percent to $95.3 million [P4.4 billion] from the $102.6 million registered in the same period in 2014.

Profits declined due to the lower earnings booked by unit EDC resulting from the outage of the Tongonan Plant in Leyte, trading losses on the Unified Leyte strip business, higher operating expenses, and typhoon-proofing works.

FG Hydro likewise posted a dip in revenues as the plants suffered from weak spot market prices and a reduction in electricity production caused by lower water availability.


But the natural gas plants generated higher earnings, First Gen said.

It said recurring net income attributable to the parent also slipped 7.3 percent in the first half to $83.9 million from $90.4 million a year ago.

First Gen’s consolidated revenues from the sale of electricity increased by 3.2 percent to $965.3 million for the first half from $935.5 million in the same period last year.

The Santa Rita and San Lorenzo natural gas-fired power plants accounted for $587.7 million, or 60.9 percent, of First Gen’s total consolidated revenues. However, their combined revenues were relatively flat compared to the $593 million recorded last year.

Electricity produced by Santa Rita was higher as the 1,000-megawatt (MW) plant recovered from the damage suffered by one of its transformers in February 2014. However, this was offset by lower fuel revenues as gas prices were lower in 2015.

The combined earnings contribution of the natural gas-fired plants grew to $67.1 million in the first six months against $60.2 million in the same period last year.

The company said this was due to lower interest expenses and the receipt of additional insurance claims last April by the 500-MW San Lorenzo power plant for business interruption and machinery breakdown in 2013.

First Gen said EDC’s revenues accounted for $346 million, or 35.9 percent, of consolidated revenues while FG Hydro’s revenues totaled $27.2 million, accounting for 2.8 percent.

EDC’s revenues were 11.9 percent higher than the $309.4 million it generated in the same period last year, the company said.

This was mainly due to incremental revenues from fresh contributions of the 154-MW Burgos project, the 49.4-MW Nasulo plant, and the 140-MW Bacon-Manito plant.

However, reliability issues at the Tongonan Plant tempered the rise in revenues, which was also offset by trading losses, higher operating expenses and typhoon-proofing works.

As a result, the earnings contribution of EDC in the first half of 2015 declined to $47.4 million from $62.4 million last year.

On the other hand, FG Hydro’s revenues fell to $7.6 million in the first half of 2015 from $10.7 million a year earlier due to lower average spot market prices and lower electricity production.

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