Forex, EDC stake drag First Gen's earnings

MANILA, Philippines - First Gen Corp. on Tuesday said its purchase of a controlling stake in alternative power producer PNOC-Energy Development Corp. and foreign exchange volatility substantially reduced its net income in 2008. First Gen told the Philippine Stock Exchange that its bottomline in 2008 dropped 86.22 percent to $14.5 million while revenues rose 60.6 percent to $1.8 billion. "The decrease in net income was primarily driven by an increase in interest and financing costs resulting from the debt taken on for the company's purchase of a controlling stake in Energy Development Corp. (EDC), coupled with unrealized foreign exchange losses resulting from the revaluation of the group's foreign currency loans and assets, the full year income tax payments of the 1,000MW Santa Rita Power Plant (whose income tax holiday ended in May 2007), and the lower net income of First Gen Hydro Power Corp," the company said. Giles Puno, First Gen chief finance officer, said the interest expense for over $1.0 billion in short-term debt that First Gen took on to acquire a controlling stake in EDC was the main reason for the lower numbers last year. "The results were made worse by the depreciation of the Philippine Peso versus the US Dollar," Puno said. - GMANews.TV