First Gen Corp. saw an 11% plunge in earnings for the first quarter 2017, yielding only $45 million versus $51 million recorded quarter-on-quarter.
The company defends the soft numbers in a company disclosure on May 9, Tuesday, explaining the sudden decline is caused by the low temperature experienced in the initial months of the year, the Philippine Star writes.
“The fact that the first quarter numbers are down, actually is not unexpected… especially when you have a merchant plant portfolio. Despite the fact that they’re cost competitive, the demand for electricity in first is very low because of the cooler weather season,” First Gen President and Chief Operating Officer Francis Giles Puno said.
As a result, the renewable energy firm closed in an attributable net income of $41 million, a significant low of $17 million from last year’s $58 million.
Wholesale Electricity Spot Market (WESM) prices also played a factor in the seasonal lower revenues bore by its merchant power plants.
First Gen posed a favorable pivot through its consolidated revenues, however, as electricity sales upped by 2% with $428 million compared to $420 million of the same period in 2016.
To name, the natural gas portfolio generated 54% in consolidated revenues at $233 million via contributions from the 414-megawatt (MW) San Gabriel and 97-MW Avion power plants; Energy Development Corp.’s geothermal, wind and solar revenues at 41% with $177 million; lastly, the 132-MW Pantabangan-Masiway hydroelectric plants at 4% with $16 million.
“San Gabriel and Avion are projected to contribute higher to earnings this second quarter,” Puno said of the two energy houses in Batangas.
The summer season will be unforgiving and the need to dispatch these plants are expected to increase in the next quarter.
“It will be dispatched higher because the capacity is needed, and unfortunately, many of coal plants are getting older, they go on unscheduled outages, pushing WESM prices to go up,” Puno added.
The company remains positive and expects to at least reach the recurring income as last year. The implementation and construction of the LNG facility, First Gen’s major investment for 2017, is set for a $15-$25 million budget that is to coincide with the sustenance of San Gabriel and Avion plants at $15 million.
“The company has allotted $40-50 million in capital expenditures this year, excluding the budget of its subsidiary Energy Development Corp. (EDC),” Chief Financial Officer Emmanuel Singson said.
Citing that the company is spending less on capital expenditures, Puno concluded, “2016 had a lot of one-offs… we reported $200 million in 2016 but that’s not all recurring. What we’re hoping is that we bring that all up even on a recurring basis, that’s our fighting target, which is to hit that number on a recurring basis rather than it being supplemented by one-offs.”