First Gen earns $200 M in 2016, up 19%; sees higher profit this year

Listed First Gen Corporation (First Gen), a Lopez Group company, is expecting to see better income this year after registering flat growth in 2016.

A disclosure to the Philippine Stock Exchange yesterday showed that First Gen’s net income attributable to equity holders of the parent stood at US$200 million in 2016, a 19 percent increase from the US$167 million it made in 2015. But on a recurring basis, the company’s attributable net income was actually flat at US$162 million.

“As most of the platforms’ power plants in the portfolio benefited from higher dispatch, these were offset by lower spot market prices. These likewise offset the gains made from cost-containment initiatives,” the company told the Exchange.

First Gen President and Chief Operating Officer Francis Giles B. Puno said that though 2016 was a challenging year, “it was also the year First Gen achieved its highest net income.”

“We are optimistic that this trend will continue with the addition of our two newest natural gas–fired plants – the 414- megawatt (MW) San Gabriel Flex Plant and the 97 MW Avion Peaking Plant – that will deliver full year operations this year, alongside marked improvements in the operations of EDC’s 100 percent renewable portfolio,” Puno said.

Likewise, First Gen’s consolidated revenues from the sale of electricity decreased to US$1.56 billion for 2016 compared to US$1.84 billion in the previous year.

The 1,000 MW Santa Rita and the 500MW San Lorenzo natural gas-fired power plants, which accounted for 53 percent of First Gen’s total consolidated revenues, saw lower revenues of US$827 million, 23 percent lower in comparison to their contribution of US$1.08 billion in 2015.

This, according to the company was mainly due to lower fuel pass-through prices, worsened by the lower combined dispatch of the gas plants at 75 percent in 2016 versus 81 percent in 2015.

To supplement Santa Rita and San Lorenzo’s earnings, the Company’s newest natural gasfired power plant, 414 MW San Gabriel Flex Plant, recorded US$36 million of income from delay liquidated damages that was partially offset by expenses, while its 97 MW Avion Peaking Plant generated commissioning income in 2016.

The earnings contribution from the natural gas portfolio increased by US$21 million to US$142 million in 2016, the company emphasized.

Energy Development Corporation (EDC), a part of the First Gen group, also saw its 140 MW BacMan geothermal plant booked non-recurring income in 2016.

Accounting for 43 percent of its total consolidated revenues, EDC’s geothermal, wind and solar saw lower revenues of US$676 million last year from US$717 million in 2015 due to an unfavorable effect of foreign exchange translation.

“The actual decline in revenues from lower spot market prices was US$11 million (out of US$41 million). This was despite the power plants’ higher dispatch,” the company specified in its financial report.

EDC’s attributable earnings of US$89 million in 2016 came in higher from US$78 million in 2015 mostly due to drops in operating, interest, and administrative expenses, augmented by a receipt in insurance claims from its BacMan power plant.

FG Hydro, on the other hand, showed a growth in revenues of US$7 million in 2016 versus 2015’s US$42 million due to the higher dispatch of its power plants and higher ancillary service sales.

Consequently, the attributable earnings contribution of FG Hydro was higher by US$5 million, or 60 percent at US$14 million.