First Gen earnings drop 17% to $77.7 M in H1

MANILA, Philippines - First Gen Corp. posted a net income of $77.7 million in the first half of 2013, down 17.4 percent from $94 million in the same period last year. 

First Gen president Francis Giles Puno attributed the drop in earnings to the lower income booked by subsidiary First Gen Hydro Power Corp. (FG Hydro) owing to reduced sales from ancillary services. 

However, Puno said they had anticipated the decline in earnings for the period.

“The dip in earnings was expected given the reduced revenues from ancillary services and further delays in the rehabilitation of BacMan,” the First Gen executive said. 

“The incident at San Lorenzo’s Unit 60 was unfortunate, but we have already ordered a new transformer to get the unit back in operation as soon as possible,” he added. 

“While EDC actually generated higher revenues and achieved savings in its operating expenses, the foreign exchange losses could not be avoided with the depreciation of the peso,” he noted. 

“The company is extremely busy in executing its growth projects, including the 87-megawatt wind farm in Burgos, the 40-MW Negros transfer project, and the 500-MW San Gabriel natural gas projects,” he added.

Puno said the 1,500-MW First Gas plants also incurred higher interest expenses and provision for deferred income tax due to the depreciation of the peso, though partially offset by the contribution of the purchase of the BG Group’s 40 percent stake in the plants in May 2012. 

Its geothermal subsidiary, Energy Development Corp. (EDC), likewise had lower earnings due to foreign exchange losses.

On a recurring basis, First Gen’s net income stood at $92 million, higher by 1.4 percent than the same period last year due to the greater recurring income contribution of EDC and the reduction of interest expense of $13.9 million that was mostly realized at the parent company.

First Gen’s consolidated revenues decreased by $43.6 million, or 4.2 percent, to $984.6 million in the first half from $1.028 billion in 2012. 

The First Gas plants accounted for $656 million, or 66.6 percent of consolidated revenues; EDC’s geothermal revenues accounted for $290.9 million, or 29.5 percent; and FG Hydro accounted for $37.2 million, or 3.8 percent.

The First Gas plants’ revenues were 6.3 percent lower from $700.5 million in 2012 due to a slight drop in fuel prices and lower dispatch of the gas plants. 

The decrease in dispatch was brought about by a scheduled major maintenance outage of the 1,000-MW Santa Rita power plant and the fire that occurred at San Lorenzo’s Unit 60 transformer last May 28.