First Gen profit up 43% to $104.2 million in January-September

MANILA, Philippines - First Gen Corp., the power generation unit of the Lopez Group, reported a consolidated net income of $104.2 million in the first three quarters of 2010, up 43 percent from $73.3 million in the same period last year.

In a statement, First Gen said the increase in earnings was driven by the strong operating performance of main units First Gas, First Gen Hydro Power Corp. and Energy Development Corp. (EDC).

First Gen’s consolidated revenues likewise jumped 27 percent to $980.1 million from last year’s $771.9 million.

The steady and reliable dispatch of First Gas’ 1,000-megawatt Sta. Rita and 500-MW San Lorenzo natural gas-fired power plants were the main contributors for the increase in revenues from the sale of electricity. Combined, their power sales rose 19 percent to $906 million from $763.7 million in 2009.

The higher revenues, however, were offset by a corresponding increase in the pass-through fuel charge to the company’s electricity offtaker, and higher operations and maintenance fees paid to Siemens Power Operations Inc.

“While our First Gas plants continue to deliver solid and dependable results, earnings growth was delivered by EDC coming mainly from the increased contribution of the plants that it acquired last year. We are fortunate that these developments are aided by the positive sentiment and growth of our economy today,” First Gen president Giles Puno said.

For the period ending Sept. 30, 2010, the First Gas plants delivered stable earnings of $98.4 million, of which First Gen’s equity share stood at $59 million, $3.3 million higher compared to last year.

Equity in net earnings from associates turned significantly around to $58.8 million for the period compared to last year’s loss of $11.8 million.

EDC, a subsidiary of Red Vulcan Holdings and the country’s largest operator of geothermal-fired power plants, provided higher earnings to First Gen of $53.4 million as of September, up $42.9 million as compared to $10.5 million in the previous year.

This improvement resulted from the electricity sales of its 192.5 MW Palinpinon and 112-MW Tongonan geothermal power plants, which were acquired in September 2009.

Adding to the positive variance was FG Hydro’s income contribution, which increased by $12.1 million from $3.9 million to $16 million. Puno said this increase was due to better prices at the wholesale electricity spot market and higher dispatch of the plants this year.

The company continues to enjoy the positive effects of its deleveraging program, with its P5-billion bond issue fully paid last July 30, 2010.

In addition, it incurred fine percent lower interest expenses to $80.1 million as of September from $84.3 million last year. This was, however, offset by higher administrative expenses due to various development and refinancing activities.