First Gen geothermal business seen continuing weaker

by Lenie Lectura – November 16, 2015

from Business Mirror

FIRST Gen Corp., which posted a 26-percent drop in net income at end-September this year, said on Monday that its geothermal business would continue to post “weaker contributions” until year-end.

The company posted $120 million in reported net income attributable to equity holders of the parent from January to September this year from $163 million in the same period a year ago. The decline was due to lower earnings contributions from its geothermal and hydropower operations, partially offset by higher earnings from its natural-gas plants.

Core income stood at $129 million at end-September this year, down by 4 percent from $135 million in the same period last year.

“We expect to end the year with weaker contributions from our geothermal operations, which will be offset by improved dispatch from the Burgos Wind Project with the transmission constraint addressed,” First Gen President Francis Giles Puno said.

First Gen’s consolidated revenues from the sale of electricity were relatively flat at $1.4 billion during the period.

The Santa Rita and San Lorenzo natural gas-fired power plants accounted for $834 million, or 60 percent, of First Gen’s total consolidated revenues. Their revenues were 8 percent lower compared to its contribution of $904 million in 2014 due to lower fuel charges. This was partially offset by the higher combined dispatch of the gas plants at 81 percent versus last year’s 70 percent.

First Gen is building more gas power plants. Puno said commissioning of the 97-megawatt (MW) Avion peaking plant and the 414-MW San Gabriel mid-merit plant will happen by year-end and in the second quarter of 2016, respectively.

“We look forward to reporting improved financial performance in 2016 driven by stronger income across our clean and renewable-energy platform,” Puno added.

First Gen subsidiary Energy Development Corp.’s (EDC) revenues accounted for $524 million, or 37 percent, while First Gen Hydro Power Corp.’s (FG Hydro) revenues were $35 million, or 2 percent of total consolidated revenues.

EDC’s revenues rose by $42 million, or 9 percent higher mainly due to contributions from the 154.16-MW Burgos Project, the 49.4-MW Nasulo Plant, and the 140- MW Bacon-Manito Plant. This was offset by the outage of the Tongonan Plant in Leyte in early 2015, unrealized foreign-exchange losses, higher operating expenses, and the absence of a one-time reversal of impairment provision recognized in 2014. As a result, EDC’s geothermal and wind-income contribution to First Gen as of the third quarter of 2015 declined to $60 million from $109 million.

FG Hydro’s revenues were slightly higher by $2 million at $35 million in the first nine months of 2015. However, the earnings contribution of FG Hydro was marginally lower at $9 million due to higher income taxes paid as its income-tax holiday expired in April 2014.