First Gen posts strong performance in 2010

MANILA, Philippines - The strong performance of its renewable energy subsidiaries pushed the income of the First Gen Corp. by 27 percent to $121 million in 2010 from $95 million in 2009.

In a report to the Philippine Stock Exchange (PSE), First Gen said its consolidated revenues also increased to $1.2 billion, up $222.1 million, or 22 percent from last year’s $1 billion. 

“The substantial increase in earnings was driven by the strong operating performance of the First Gas group, First Gen Hydro Power Corp. (FG Hydro) and Energy Development Corp. These developments were complemented by the positive effects of the company’s deleveraging program,” First Gen president Giles Puno said.

Puno said during the period its gas power plants were also able to substantially dispatch their capacities, resulting in more income for the group. “The reliable dispatch of First Gas’ 1,000-megawatt Santa Rita and 500-MW San Lorenzo natural gas-fired power plants were the main contributors to the increase in revenues from the sale of electricity,” he said.

However, the company noted that some of its revenues were diluted due to the pass-through fuel charges to its electricity buyers and higher operations and maintenance fees paid to Siemens Power Operations Inc.

In the report, it was noted the First Gas plants delivered stable earnings of $130.1 million in 2010.

Its geothermal arm, EDC, increased its income to $52.5 million in 2010, up by $21.5 million, as compared to $31 million the previous year. 

However, Puno noted that the improvement in earnings was partially offset by the impairment booked for EDC’s 49-mw Northern Negros geothermal power plant and lower revenues from EDC’s Unified Leyte geothermal power plant complex.

Meanwhile, FG Hydro’s income jumped by $8.4 million to $9.9 million from $1.5 million in 2009, due to better prices in the wholesale electricity spot market (WESM) and higher dispatch of the hydro plants.

First Gen also reported lower interest expenses for Red Vulcan Holdings Corp. (Red Vulcan), the company that directly owns 40 percent of EDC. In 2010, Red Vulcan reduced its debt by 40 percent to P8.3 billion from P13.8 billion.

First Gen’s total debt went down to $1.1 billion in 2010 from $1.2 billion in 2009. First Gen also bought back and retired $74 million in face value of its convertible bond in 2010 and paid off its P5-billion bond. 

Themove to prepay its debts resulted in lower interest expenses in 2010 at $104.2 million, in comparison to 2009’s total interest expense of $112.1 million. 

In January 2010, First Gen raised some P15 billion to prepay its loans.