Semirara earnings fall as softer prices, higher costs offset operational gains
From AB Capital's The Opening Bell: Three Moves
Event
SCC reported 4Q25 net income of P3.2 billion (-18% YoY), bringing FY25 to P13.1 billion (-33% YoY), missing expectations. Earnings were pressured by lower coal and electricity prices and higher costs. This came despite record coal production of 19.9MMT (+24% YoY) and record power sales of 5,296 GWh (+7% YoY) during the year.
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While coal production hit record levels, earnings lagged, with full year shipments down 7%. 4Q shipments were only 2.6MMT compared with 3.5–4.7MMT in 1Q–3Q, highlighting softer demand and timing of exports. On the power side, output continues to increase, but SCC retains the highest spot exposure among our coverage, with roughly 54% of electricity sold to the spot market, leaving earnings sensitive to weaker WESM prices. On the regulatory front, the DOE recently clarified that government royalty terms are already defined under law and will not increase under the new coal contract, suggesting fiscal terms should remain broadly similar if SCC wins the rebid.
Catalyst
Near-term catalysts include the earnings briefing, which should provide more detail on shipment trends, cost pressures, and market strategy, as well as developments ahead of the coal contract rebid (timelines and potential competing bidders).
Action
We maintain our NEUTRAL rating on SCC. We continue to think SCC has a high likelihood of winning the coal contract, but operational headwinds from softer prices and shipment volatility, alongside regulatory uncertainty remain key risks to the near-term outlook.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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