Energy Development Corporation income drops in H1

MANILA, Philippines - Profits of Lopez-led geothermal and wind energy company Energy Development Corp. (EDC) dropped more than a quarter in the first half of 2015 mainly due to the outage of its power geothermal asset and lower output of its hydropower project, as well as higher expenses related to typhoon repair works.

In a disclosure to the Philippine Stock Exchange, the company reported a 27 percent drop in consolidated net income to P4.6 billion from January to June this year from P6.3 billion in the same period last year.

Exclusive of non-recurring items, its recurring income also fell 14 percent to P4.7 billion from P5.4 billion a year earlier.

EDC attributed the decrease to the outage of the 112.5-megawatt (MW) Tongonan geothermal plant, trading losses on the Unified Leyte geothermal plant strip business, and lower output and higher income tax of the 112-MW Pantabangan-Masiway hydro power plants owing to the end of its income tax holiday in April 2014.

“Our first half 2015 results fell short of target due to reliability issues at Tongonan Geothermal Power Plant,” Richard Tantoco, EDC president and COO, said.

“These setbacks are significant but temporary as the turbine retrofit of Tongonan will commence third quarter of 2016 and similar to Bac-Man (Bacon-Manito geothermal plant), we expect to boost reliability and increase plant output,” he added.

The company also said higher operating expenses (opex) and typhoon repair works being reported for the first two quarters also pulled down earnings.

These were incurred primarily for the newly commissioned 49.4-MW Nasulo geothermal plant in Valencia, Negros Oriental and 87-MW wind farm in Burgos, Ilocos Norte, as well as additional expenditures for improving its own equipment and infrastructure’s resiliency to harsh weather conditions, which the company calls “typhoon proofing” opex and capital expenditure program.

In terms of consolidated revenues, figures went up 10 percent to P16.8 billion from P15.2 billion during the same period in 2014.

EDC said improved revenues came from higher energy sales from the newly rehabilitated Bac-Man power plants and the newly commissioned Nasulo geothermal and Burgos wind power plants, both of which were commissioned only during the latter part of 2014.

Revenues from Bacman’s Unit 1, 2 and 3 power plants increased by P0.7 billion while Nasulo and Burgos wind power plants contributed P0.7 billion and P0.9 billion, respectively.

However, outages in the Tongonan plants, as well as the lower prices for both Tongonan and 192.5-MW Palinpinon geothermal power plants tempered the rise in total revenues.