LOPEZ-LED First Gen Corp. reported on Tuesday an 11-percent drop in recurring profit for the first quarter of this year as seasonally softer prices on the Wholesale Electricity Sport Market (WESM) meant lower revenues for its merchant power plants.
The renewable energy producer said net income attributable to equity holders of the parent fell to $45 million in the first quarter from $51 million in the same period last year. Attributable net income was $41 million in the quarter, which was $17 million lower from a year ago.
“The fact that the Q1 numbers are down is not unexpected…especially when you have a merchant plant portfolio. Despite the fact that they are cost competitive, the demand for electricity in Q1 [was]very low because of the cooler weather season,” First Gen President and COO Francis Giles B. Puno said in a press briefing on Tuesday.
The company is optimistic that it will catch up i n the following quarters, especially during the scorching summer months, as the natural gas plants provide a reliable back-up to the many aging baseload coal plants operating in the grid.
First Gen said consolidated revenues from the sale of electricity increased to $428 million in the first quarter from $420 million in the same quarter last year.
The natural gas portfolio accounted for $233 million, or 54 percent of First Gen’s total consolidated revenues.
Revenues from this segment were 2 percent higher for the first quarter mainly due to the fresh contributions of the 97-megawatt (MW) Avion Peaking Power Plant and the 420-MW San Gabriel Flex Plant, though partially offset by the lower combined dispatch of the 1,000-MW Santa Rita and the 500-MW San Lorenzo Power Plants at 67 percent in 2017 versus 84 percent in 2016.
However, as cool weather affected spot market prices, the earnings contribution from the natural gas portfolio decreased by $15 million to $19 million in the first quarter of this year, First Gen said.
Aside from its natural gas portfolio, First Gen is the largest shareholder in Energy Development Corporation (EDC), which owns and operates geothermal, wind, hydro and solar power plants in the country. EDC revenues accounted for $177 million, or 41 percent, of total consolidated revenues.
First Gen CFO and Treasurer Emmanuel P. Singson said that capital expenditure (capex) this year is set at $40 to $50 million, excluding EDC: $15-25 million would go to LNG facility soil improvement and around $15 million to finish San Gabriel and Avion.
First Gen had a capex of $300 million in 2016, which was used mostly for the Avion and San Gabriel plants, and $200 million in 2015, he added.
“Our capex [this year]is relatively low because we’ve spent all our capex in the last couple of years. Our priority this year is less capex-centric. It’s driven by how we can prove to our shareholders that San Gab and Avion are good investments,” Puno said.
“The company’s financing is all internally generated funds. We just completed a $500-million facility and FGen will probably have in excess of $200 million to prefund maturities next year, buy back more expensive debt,” he said.