First Gen earns $115 M in H1, up 35%

MANILA, Philippines — Lopez-led First Gen Corp. reported higher earnings in the first half of the year, driven by its natural gas platform.

In a disclosure to the Philippines Stock Exchange, First Gen said its recurring net income surged 35 percent to $115 million (P5.9 billion) from $85 million (P4.3 billion) in the same period last year.

“The natural gas platform’s performance offset the soft performance of the other platforms,” First Gen said.

The company’s natural gas platform posted recurring earnings of $88 million (P4.5 billion) from $51 million (P2.5 billion) in the same period a year ago.

“First Gen’s strong numbers were likewise boosted by lower interest expenses as a result of the company’s deleveraging initiatives,” the company added.

“The solid showing from the 97 MW Avion peaking plant and the 420-MW San Gabriel flex plant, as well as savings in interest expense, offset unrealized foreign exchange losses and the renewable energy businesses’ lower earnings in 1H18,” the company said.

Meanwhile, the company’s consolidated revenues from the sale of electricity increased by 10 percent to $939 million (P48.4 billion) from $854 million (P42.6 billion) in the first half last year.

This was again driven by its natural gas portfolio, which accounted for 64 percent of total consolidated revenues or $599 million (P30.9 billion). Revenues from this segment posted a 22 percent rise from last year’s figures mainly due to higher volume sales and spot market prices.

“The gas portfolio thrived during this period, especially San Gabriel and Avion that have been able to achieve remarkable turnarounds this year as they delivered much needed power to the grid,” First Gen president and COO Francis Giles Puno said.

“For the second half of 2018, San Gabriel shifts to being a contracted provider of electricity to Meralco allowing it to achieve stable earnings. This contract proves the price competitiveness of natural gas-fired power versus coal-fired power even at baseload and more so at mid-merit levels of dispatch,” Puno added.

Moreover, geothermal, wind and solar revenues of its subsidiary Energy Development Corp. (EDC) accounted for 31 percent of total consolidated revenues or $291 million (P15 billion).

EDC’s revenues declined by eight percent in the first six months of the year from $318 million(P15.9 billion) in the same period last year mainly due to the damage sustained by Unified Leyte and Tongonan plants due to typhoons in December 2017.

“This was mildly offset by the higher dispatch and selling prices of its other plants. EDC also collected insurance in the first semester of 2018 amounting to $11 million (P0.6 billion),” the company said.

First Gen said its recurring attributable earnings from EDC (excluding FG Hydro) was lower at $34 million (P1.8 billion) in 2018 versus 2017’s $54 million (P2.7 billion) mainly because of the calamity, the foreign exchange translation of EDC’s peso books into US dollars which is First Gen’s functional currency, and First Gen’s smaller stake in the company after the tender offer in September last year.

FG Hydro, the owner of the 132-MW Pantabangan-Masiway hydroelectric plants, reported eight percent decrease in revenue to $23 million (P1.2 billion).

This was due to the absence of ancillary service sales in the first quarter of 2018. The hydro plants account for only three percent of First Gen’s total consolidated revenues.

“Consequently, the recurring attributable earnings contribution of $5 million (P0.2 billion) is less than last year’s $7 million (P0.3 billion),” First Gen said.

“EDC and FG Hydro are expected to perform better in the second half of 2018 as they both have recovered from each of their respective setbacks. EDC’s Leyte site is back to pre-earthquake and typhoon levels, while FG Hydro has resumed selling ancillary services since end-March of this year,” Puno said.