First Gen income up 32% in H1

MANILA, Philippines - Lopez-owned power generation First Gen Corp. company reported a 32 percent increase in its net income to $102.6 million in the first half of the year, from $77.7 million in the same period last year.

The company traced the healthy first half performance to higher earnings of geothermal subsidiary Energy Development Corp. (EDC) from the 130 megawatt Bacon- Manito (BacMan) and 106-MW Mindanao power plants, as well as to foreign exchange gains.

First Gen said its own Santa Rita and San Lorenzo natural gas-fired plants also contributed higher income due to plant upgrades and partially collected insurance claims.

“On a recurring basis, net income attributable to the parent was $90.3 million, lower by 3.2 percent than last year’s $93.2 million due to higher interest and project development expenses for the company’s growth projects,” First Gen said in a disclosure to the Philippine Stock Exchange (PSE) yesterday.

These growth projects are the 97-MW Avion and the 414-MW San Gabriel natural gas-fired power plants that are expected to come online April 2015 and March 2016, respectively, First Gen said.

In terms of revenues, the company registered a five-percent decrease to $935.5 million or $49.1 million lower than the $984.6 million in the same period last year.

Officials attributed the decrease in revenues to lower electricity sales.

The First Gas plants accounted for $593 million, or 63.4 percent of total consolidated revenues. EDC’s revenues, which include those of First Gen Hydro Power Corp., accounted for $338.3 million, or 36.2 percent of the total, the company said.

“The First Gas plants’ revenues were 9.6 percent lower from the previous year’s $656 million due to lower average gas prices and lower dispatch. The lower electricity generated was due to the damage incurred by Santa Rita’s 250 MW Unit 40 main transformer, which was re-commissioned in July 2014 after the expedited delivery and installation of a new transformer. Despite this, the incremental effect of San Lorenzo’s capacity upgrade and benefits from deferred income taxes were able to offset the drop in revenues,” it said.

As a result, the First Gas plants contributed $58.4 million to the company’s net income for the first semester of 2014, higher than the previous year’s $42.5 million, the company also said in the disclosure.

On the other hand, EDC’s revenues rose 4.2 percent from $328.1 million generated a year ago.

“Its revenues grew by $13.7 million mainly due to the electricity generated by the BacMan and Mindanao power plants,” it said.

First Gen president Francis Giles Puno said although the company is incurring higher development expenses for its growth projects, higher revenues will come in next year and in 2016.

“Though we are currently incurring higher development expenses in pursuing our growth projects, the new 150-MW wind farm in Burgos, the 97-MW Avion, and the 414-MW San Gabriel natural gas projects will start contributing higher revenue growth for First Gen in 2015 and 2016,” he said.