ENERGY Development Corp. (EDC) expects this year’s revenues and profit to be flat, as the Lopez-led company ended the first quarter with a double-digit decline in top-line and bottom line figures.
“We expect, as the units come online, to catch up. But compared to last year — our last year’s RNIA (recurring net income attributable to equity holders) was about P8.8 billion… Most likely we’ll probably end with the same, more or less, level,” said Erwin O. Avante, EDC vice-president and head for corporate finance.
“Last year, we were struck with the earthquake, starting July. So this year, depending on the progress in terms of putting the units back online we may end up with about the same level as last year,” he said in a briefing after the company’s annual stockholders meeting on Tuesday.
In the first quarter, the country’s largest geothermal and wind energy company posted consolidated revenues of P8.18 billion, down 15% from the level a year ago. Including non-recurring items, EDC reported a consolidated net income attributable to equity holders of P1.34 billion, or less than half of last year’s P3.09 billion.
In a regulatory filing, EDC attributed the decline to lower revenues, and was partly offset by higher insurance proceeds and lower interest expense.
Net income was down by 54% to P1.5 billion from P3.26 billion, although the company said its financial position remained strong with a cash balance of P14.27 billion.
In a statement, EDC Chief Financial Officer Nestor H. Vasay said the first-quarter results were dominated by the impact of Typhoon Urduja that hit Leyte island, the site of the company’s biggest geothermal business unit, in December.
“Generation volume was lower by about 40% in Leyte compared to 1Q of 2017, and we continued to incur recovery expenses. However, we are now at 90% of the return-to-service activities in Leyte, and is targeting to complete our program by the 3rd quarter,” he said.
Richard B. Tantoco, EDC president and chief operating officer, said the company would be focused on its geothermal business this year.
“Majority of our investments this year will happen in two areas. One is in our switchyards. We’re increasing the seismic specifications across our entire fleet. What we have there still works… As we maintain the assets, we’ll put the new ones and then we’ll have spares — the old ones,” he said, adding that this will happen this year and next.
“The second one is in the land site mitigation. We’re spending this year four times the average of the past 12 years,” he said, citing the latest outlay at P400 million for EDC’s Leyte assets.
Mr. Tantoco said the company’s foray into solar power would take a pause this year “because so many people had gotten into it.”
He said investments for wind would also be limited to the maintenance of the company’s concession areas. He noted the price of wind turbines has not gone down “far enough” to start a viable project without a guaranteed feed-in-tariff.
EDC has allocated a capital expenditure of P6.1 billion for this year, Mr. Avante said, adding that the amount is around the same as the previous year. — Victor V. Saulon