PNOC-EDC profit drops 39% to P2.46 B in H1

Geothermal power firm Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) reported a 38.6-percent drop in its net profit for the first half this year to P2.46 billion due to lower revenues and foreign exchange losses. 

In a financial report filed with the Philippine Stock Exchange, PNOC-EDC said it booked foreign exchange losses of P3.21 billion compared with a foreign exchange gain of P2.38 billion in the same period a year ago.

Revenues fell 6.5 percent to P8.81 billion from P9.42 billion due to a drop in average price per kilowatt-hour for electricity sales.

PNOC-EDC posted a recurring net income of P3.02 billion, up 17 percent from the previous level of P2.58 billion, largely due to lower expenses with the completion of the build-operate-transfer (BOT) contracts for all power plants in Leyte.  This was partly offset by the P610.5-million drop in revenues with the decline in average unit price(s) per kwh and the P661.2 million incurred as operating expenses for the newlyturned over power plants in Leyte and the Northern Negros Geothermal Production Field Project.

Operating expenses, however, declined 22.3 percent to P3.64 billion due to lower purchased services and  utilities and general and administrative expenses.

As of end-June 2008, PNOC-EDC had cash and cash equivalents of P1.8 billion, down 35.6 percent from the end-2007 level of P2.8 billion.  The net reduction resulted primarily from the P4.053 billion paid out as regular and special cash dividend, P1.2549 billion representing principal amortization payments made for all outstanding loans and BOT obligations, and the P5.24 billion cash generated as of the second quarter of the year.

Total assets stood at P65.03 billion as of June 30 this year.

PNOC-EDC currently has 12 geothermal projects in the five geothermal service contract areas where it is principally involved in.  It generated P344.2 million from the contract it entered into with Lihir Gold Ltd. in Papua, New Guinea, representing 3.9 percent of PNOC-EDC’s gross revenues. 

From steam and electricity sales, PNOC-EDC generated P8.4619 billion in gross revenues.

The company’s geothermal steam competes against other major energy sources for the production of electricity particularly coal, natural gas and oil.

For the supply of geothermal steam, the only other company operating in the Philippines is Chevron Philippines Geothermal Holdings Inc. (further to Chevron Texaco Corp.’s acquisition of Union Oil of California).

With the government’s commitment to privatize majority of state-owned power generation facilities and the establishment of the wholesale electricity spot market (WESM), the company will be exposed to a diversified base of independent power producer (IPP) off-takers in the future.