First Gen posts flat earnings

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first Gen corp.

FIRST Gen Corp. reported “flat earnings growth” for 2017, at $163 million, as the natural calamities that struck Leyte last year hit the performance of its geothermal and hydroelectric plants in the area.

Lopez-led First Gen previously reported its 2016 recurring net income attributable to equity holders of the parent firm at $162 million.

Francis Giles B. Puno, First Gen president and chief operating officer, said the “flat earnings growth” did not reflect the “noteworthy” achievements of the company last year that “strongly positions” it to develop a cost-competitive and flexible platform.

“This platform is best prepared to both enable and address a low-carbon energy future,” he said in a statement.

The company also told the stock exchange that its non-recurring net income in 2017 reached $134 million, lower by $29 million compared with the one-time effect of break funding costs. The company presents its financial report in US dollars, which is its functional currency.

The costs were incurred as a result of the $500 million refinancing of the 1,000-megawatt (MW) Santa Rita power plant’s long-term debt in May 2017, as well as premiums paid for the partial buyback of the US dollar-denominated bonds of First Gen and subsidiary Energy Development Corp. (EDC).

These costs were in addition to EDC’s earthquake- and typhoon-related expenditures, the company said.

First Gen said its natural gas platform posted recurring earnings of $120 million, up from $112 million in 2016.

Its geothermal and hydroelectric platforms both suffered from lower recurring earnings, which the company blamed on natural calamities and weak spot market prices. But these were offset by lower expenses at the parent firm as $309 million of debt was prepaid.

First Gen reported that its consolidated revenues from the sale of electricity increased by 9% to $1.71 billion. The company’s natural gas portfolio accounted for $1.04 billion, or 61% of the total, and higher by 24% compared with the figure in the earlier year.

The increase was attributed mainly on the full-year contributions of the Avion and San Gabriel plants, and higher fuel revenues of the Santa Rita and the 500-MW San Lorenzo power plants.

The total recurring earnings contribution from First Gen’s natural gas portfolio increased by $8 million to $120 million in 2017, the company said.

“On our clean low-carbon gas platform, we closed out the residual technical issues in operating the 420 MW San Gabriel flex plant and the 97 MW Avion peaking plant in the first half of 2017,” Mr. Puno said.

“First Gen is also progressing with the site preparation of its LNG (liquefied natural gas) regasification terminal to be located in its First Gen Clean Energy Complex in Batangas. The LNG facility will ensure the continued supply of natural gas for all of its gas-fired power plants,” he added.

First Gen said EDC’s geothermal, wind and solar revenues provided $628 million, or 37% of total consolidated revenues. But the unit’s revenues slipped by 7% as a result of the shutdown of the Unified Leyte facility after the earthquake in July.

The site suffered more damage when Typhoon Urduja struck in December. Recurring attributable earnings from EDC, excluding First Gen Hydro Power Corp., was lower by 12% at $87 million because of the calamities and the foreign exchange translation of the unit’s peso books into dollars.

First Gen said it was worth noting that the 140-MW BacMan power plant and the 150-MW Burgos wind project delivered more earnings last year because of the higher contracted sales and dispatch, respectively.

FG Hydro, owner of the 132-MW Pantabangan-Masiway hydroelectric plants, reported a 32% decrease in revenues to $33 million as its ancillary service contract expired in February 2017.

The hydro plants accounted for 2% of First Gen’s total consolidated revenues. Consequently, FG Hydro’s recurring attributable earnings contribution slipped by $6 million to $8 million in 2017.

Separately, First Gen told the stock exchange that its board of directors approved on Friday the increase in the company’s authorized capital stock to P11.6 billion from P8.6 billion by the creation of 300 million Series H preferred shares with a par value of P10 each.

On Friday, shares in First Gen dropped by 0.83% to close at P16.80 each. — Victor V. Saulon