Weak coal, power prices weigh on Semirara profit

SEMIRARA Mining and Power Corp. (SMPC) saw its consolidated net income drop 30 percent in 2023 to P27.9 billion from P39.9 billion a year earlier on weaker coal and electricity prices.

“All-time high coal shipments and record electricity sales,” however, softened the impact of the weaker prices, the firm said.

“Last year, we expected energy prices to stabilize, so we focused on boosting our mine and plant outputs. Our people played a crucial role in helping us manage the challenges of a fluctuating energy market,” SMPC President and Chief Operating Officer Maria Cristina Gotianun said in a statement on Wednesday.

Full-year revenues dropped 16 percent to about P77 billion, weighed down by the weaker coal and power selling prices.

For the fourth quarter alone, consolidated net income was up 36 percent year on year to P5.3 billion on higher coal shipments, while coal sales “surged 77 percent” to 5.3 million metric tons (MT) as exports “more than tripled.”

Profit contribution from coal stood at 65 percent in 2023, followed by SEM-Calaca Power Corp. (SCPC) at 28 percent and Southwest Luzon Power Generation Corp. (SLPGC) at 7 percent.

Coal sales volume rose 7 percent to 15.8 million MT as coal exports rose 14 percent to 8.1 million MT, compensating for the “stagnant” domestic sales of 7.7 million MT.

The average selling price of

SMPC’s coal fell 26 percent in 2023 — to P3,796 per MT from P5,136 per MT previously — amid oversupply from Indonesia, a warm winter and subdued global economic growth for the period.

Meanwhile, power sales from its subsidiaries SCPC and SLPGC grew 26 percent to 4,515 gigawatthours (GWh), thanks to an 86-percent gross generation hike at SCPC to 3,192 GWh.

Capital expenditures (capex) in 2023 fell 7 percent to P4 billion on lower maintenance expenditures in the power segment, but for 2024, capex is seen at P7 billion, up 75 percent from last year. About three-fourths of that will be going to the coal segment’s re-fleeting and mine exploration activities.

The company expects coal demand to remain strong this year, with prices hovering at around $77 per MT (for Newcastle prices) and $35 per MT (for Indonesian coal index 4 prices), although increased capacity and production in Indonesia, India and China could mute the impact of higher demand.

In the power segment, it expects spot prices to remain stable but lower than last year’s levels due to the introduction of about 1.5 gigawatts of fresh capacity in the Luzon-Visayas grid. However, heightened El Niño conditions in the first half may cause spot prices to spike, especially during the dry season, it added.

SMPC shares were up 0.31 percent at P32.75 each on Wednesday.