Lower coal prices pull down Semirara earnings in H1

MANILA, Philippines — Lower coal prices weighed down on Semirara Mining and Power Corp.’s earnings in the first half, with the company expecting more headwinds in the remaining months of the year.

Profits sagged 26% year-on-year to P19.2 billion in the January-June period mainly due to “high base effect and normalizing coal indices”, the Consuji-led company told the stock exchange on Monday.

This was nevertheless the “second-best” first half earnings for Semirara, thanks to a rebound in demand from China and “improved performance” of the company’s Sem-Calaca Power Corp. Unit 2.

Financial results showed average Newcastle price plunged 54% year-on-year in the first half to $148.9, while average ICI4 price dropped by 17% to $71.

The impact of declining coal prices weighed down on second quarter earnings, which dropped 5% on an annual basis to P10.2 billion. But quarter-on-quarter, profits fattened 13%.

Maria Cristina Gotianun, company president and chief operating officer, said that the second half of the year will be “challenging” because of the rainy season and planned shutdown of three Semirara power plants.

As it is, the bad weather is becoming a big headache for the company. Figures showed total production declined 12% on-year in the second quarter to 3.0 MMT due to the onset of rains and ongoing stripping activities in Molave South Block 6 and Narra North Block 1.

Weathering headwinds

But Gotianun said Semirara can withstand the headwinds because of its “high starting inventory and strategic pivot to the spot market”.

In the second quarter, total inventory grew 12% year-on-year to 2.8 MMT due to stable production and weaker domestic sales.

Total gross generation improved at an annualized rate of 27% to 1,212 GWh in the April-June period, driving up total power sales by 22%. Around 66% of overall sales went to the spot market where energy prices are high.

As of 2:32 p.m., shares in Semirara were trading up 1.88%, outperforming mild gains in the main index. — Ian Nicolas Cigaral