Earthquake, maturing debt pull down net income of Lopez Group’s First Gen

Lopez-led First Gen Corporation (First Gen) saw a slight decline in its profit in the first nine months of the year as it had to pay certain maturing obligations as well as shed money on earthquake-related expenditures during the period.

For the first nine months of 2017, First Gen saw its recurring net income attributable to equity holders of the parent going down by 4 percent to US$123 million from the US$128 million it had in the same period last year.

The company’s attributable net income for the first three quarters of 2017 also stood at US$101 million.

"Attributable net income was lower than recurring net income by US$22 million due to the one-time effect of break funding costs incurred as a result of a US$500-million refinancing of the 1,000-megawatt (MW) Santa Rita Power Plant’s long-term debt last May 2017, as well as the premium paid for EDC’s (Energy Development Corp.) partial buyback of its US Dollardenominated bond, and the geothermal company’s earthquake-related expenditures, among others," the company told the local bourse on Monday.

Nevertheless, First Gen President and Chief Operating Officer Francis Giles B. Puno was somehow pleased that "despite the recent calamities like the Batangas and Leyte earthquakes which negatively affected the operations" of the company's gas plants and its largest geothermal facility, First Gen’s recurring net income "only slightly dipped."

"Other power plants in the portfolio, like Bacman and Burgos, were able to deliver better profits this year while our newest gas plant San Gabriel recovered in the third quarter," Puno said.

"Our merchant natural gas-fired plants have been providing much-needed power these past few months as numerous power plants in the grid went offline due to unexpected and planned outages,” he added.

The Company’s 420 MW San Gabriel Flex Plant earned positive income in the third quarter as a result of higher electricity prices at the Wholesale Electricity Spot Market (WESM). This partially diminished the losses incurred by the said plant reported in the first semester of this year.

Moreover, EDC's Unified Leyte facility was negatively affected by the earthquake that hit Leyte last July, though offset by the better performance of EDC’s other power facilities.

First Gen's consolidated revenues from the sale of electricity also increased by US$104 million, or 9 percent, to US$1.2 billion as of September, 2017 compared to US$1.2 billion for the same period last year. The natural gas portfolio accounted for US$778 million, or 61 percent of First Gen’s total consolidated revenues.

Their revenues were 23 percent higher for the first nine months of 2017 mainly due to the fresh contributions of the 97-MW Avion Peaking Power Plant and the San Gabriel Flex Plant, though partially offset by the slightly lower combined dispatch of Santa Rita and the 500 MW San Lorenzo power plants at 74 percent in the first three quarters of 2017 versus 79 percent in 2016.