First Gen says 2017 earnings flat, gearing up for low-carbon future

First Gen Corporation reported on Friday its net income of $163 million attributable to equity holders of the parent for 2017 was unchanged from a year earlier.

The natural gas platform delivered recurring earnings of $120 million from $112 million in the same comparable period.

“The geothermal and hydroelectric platforms both suffered from lower recurring earnings as a result of natural calamities that struck Leyte in 2017, and weak spot market prices,” the Lopez-led clean, renewable and low-carbon electricity producer said in an emailed statement.

“These were offset by lower expenses at the parent company as $309 million of debt was prepaid in 2017,” First Gen noted.

“The flat earnings growth does not reflect the many noteworthy achievements of 2017 that strongly positions the company to develop a cost-competitive and flexible platform,” First Gen president and COO Francis Giles B. Puno said.

“This platform is best prepared to both enable and address a low-carbon energy future,” he said.

The attributable net income $134 million for 2017 was $29 million lower due to the one-time effect of break funding costs incurred as a result of a $500 million refinancing of the 1,000 MW Santa Rita power plant’s long-term debt last May 2017, as well as premiums paid for First Gen and EDC’s partial buyback of their respective US Dollar-denominated bonds.

These were in addition to EDC’s earthquake- and typhoon-related expenditures, according to First Gen. 

Consolidated revenues from the sale of electricity increased by $147 million or 9 percent to $1,708 million, compared with $1,561 million year-on-year.

The natural gas portfolio accounted for $1.036 billion, or 61 percent of First Gen’s total consolidated revenue.

Revenue was up 24 percent mainly due to the full-year contributions of the Avion and San Gabriel plants and higher fuel revenue from Santa Rita and the 500 MW San Lorenzo power plants.

Total recurring earnings contribution from First Gen’s natural gas portfolio increased by $8 million to $120 million. 

EDC’s geothermal, wind and solar revenues accounted for $628 million, or 37 percent of total consolidated revenue.

“From $676 million in 2016, EDC’s revenues declined by $48 million mainly due to the shutdown of the Unified Leyte facility shortly after the earthquake in July 2017. The site suffered additional damage when Typhoon Urduja struck in December 2017,” First Gen noted.

Recurring attributable earnings from EDC, excluding FG Hydro, was lower at $87 million from $99 million mainly because of the calamities and the foreign exchange translation of EDC’s peso books into US dollars, which is First Gen’s functional currency.

The 140 MW BacMan power plant and the 150 MW Burgos wind project delivered higher earnings in 2017 due to higher contracted sales and dispatch, respectively.

FG Hydro, owner of the 132 MW Pantabangan-Masiway hydroelectric plants, reported lower revenue $33 million, down $16 million or 32 percent, as its ancillary service contract expired in February 2017.

“The hydro plants account for only 2 percent of First Gen’s total consolidated revenues. Consequently, the recurring attributable earnings contribution of FG Hydro was lower by $6 million at $8 million in 2017,” First Gen noted.

“2018 is already off to a good start as the San Gabriel contract with the Manila Electric Co. has already been signed, while the Energy Regulatory Commission has provisionally approved FG Hydro’s ancillary service contract,” Puno noted. 

“San Gabriel and Avion have been running at high dispatch levels and benefitting from higher electricity prices at the Wholesale Electricity Spot Market as a number of older baseload plants are going through maintenance in preparation for the hot summer months, he said. —VDS, GMA News