EDC expects earnings slowdown in H2

MANILA, Philippines - Energy Development Corp. (EDC), the renewable energy arm of the Lopez Group, expects a slight slowdown in earnings growth in the second half of the year following the 6.5-magnitude earthquake that damaged its Leyte geothermal power plants.

“Earnings growth was strong during the first half of the year, but will likely become moderate for the second half of 2017 following the magnitude 6.5 earthquake that struck the island of Leyte last July 6,” EDC chief finance officer Nestor Vasay said in a statement.

“We, however, remain steadfast and have exerted efforts to expedite the return to service of the generating capacity of the Leyte plants back to their pre-earthquake levels,” he said.

In the January to June period, EDC reported a consolidated recurring net income attributable to equity holders of the parent of P5.2 billion, 11 percent higher than the P4.7 billion posted during the same period last year.

But inclusive of non-recurring items, consolidated net income stood at P4.6 billion, six percent lower than the P4.9 billion in 2016.

The firm attributed the decline to higher operating expense, foreign exchange losses on loans and loss from the early redemption of a portion of its dollar-denominated bonds partly offset by higher revenues mainly from Unified Leyte and Bacman power plants.

Consolidated revenues reached P17.7 billion in the first six months of the year, up four percent from the P17 billion recorded last year.

The firm said the increase was driven primarily by higher energy sales volumes booked by Unified Leyte plants and the reduction in the Bacman plants’ exposure to the electricity markets following the increased proportion of contracted energy sales.

“First half 2017 results confirm progress EDC has made in boosting cash generation and in delivering financial predictability to investors by addressing the uncontracted portion of its Bacman power plants and by undertaking an extensive asset reliability program for the Leyte power plants,” Vasay said.

Its Leyte plants called Unified Leyte consist of the 125-megawatt (MW) Upper Mahiao, 232.5-MW Malitbog, 180-MW Mahanagdong power plants and the 51-MW optimization plants.

The plants were providing 460 MW of power to the power grid when a 6.5-magnitude quake hit the region, prompting EDC to  shut down all of its plants to evaluate the extent of damage.