First Gen targets nearly $200M in recurring profit this year

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LOPEZ-LED First Gen Corp. expects its recurring net income in 2018 to reach nearly $200 million, an improvement over last year’s flat growth when two of its power plants were reporting losses.

“Hopefully, we’ll do a little below $200 [million] for this year if EDC [Energy Development Corp.] has a flat recurring net income,” Emmanuel P. Singson, First Gen senior vice-president and chief financial officer, told reporters after the company’s annual stockholders meeting on Wednesday.

Last year, First Gen recorded a recurring net income of $163 million, almost unchanged from the figure recorded in the earlier year, as the natural calamities that struck Leyte in 2017 hit the performance of its plants in the area.

For the first quarter of 2018, First Gen reported its recurring net income attributable to equity holders of the parent rose 34% to $60 million.

Francis Giles B. Puno, First Gen president and chief operating officer, said the company’s performance in the first quarter was a “big reversal” from the previous year.

“That’s driven primarily by a big reversal of San Gabriel and Avion,” he said, referring to the company’s two gas-fired power plants with a capacity of 420 megawatts (MW) and 97 MW, respectively.

He said the company had problems with the two plants in the first half of last year as they were recording losses and at the same time depreciating.

“From a loss, it’s now positive,” he said. “That’s why it looks like it’s a big jump.”

First Gen owns and operates 27 power plants in Luzon, Visayas and Mindanao, with 3,490 MW of installed capacity, enough to power 21.1% of the country’s gross power generation.

“We hope that momentum continues moving forward. And we hope also that with EDC now back at 512 MW, we can bring that up to an even higher output,” Mr. Puno said.

This year, First Gen has set a firm schedule for its plan to build a $1-billion liquefied natural gas (LNG) terminal and regasification facility, including the selection of a partner this year and the start of construction next year.

“Ideally, we bring in maybe at least one foreign partner and potentially local partners as well,” Mr. Puno said.

The company is in talks with “two highly experienced, world-class” engineering, procurement and construction contractors for the LNG facility, he said. Mr. Puno said First Gen would not mind having a “strong minority” stake in the project to give its partner “material ownership” in the assets.

Earlier this year, First Gen disclosed that its unit had entered into a power supply contract with distribution utility Manila Electric Co. (Meralco) for the sale and purchase of around 414 MW of baseload capacity.

“Our priority last year was really to normalize San Gabriel because that was a bigger investment. And with the contracting of San Gabriel we can now focus practically most of our effort in the development of the LNG [facility],” Mr. Puno said.

Mr. Singson said for 2018, the capital expenditure of First Gen, excluding that of EDC, would be around $35 million.

“That’s basically for the LNG [project], about $20 [million], $15 [million] for San Gabriel, some of the capex like the warehouse storage that we postponed, now we’re gonna do it,” he said.

Last year, Mr. Singson said First Gen’s budget was around $20 million.

Firt Gen expects capex to increase next year through 2022 when the full construction of the LNG facility progresses, although it does not see any need to borrow funds.

Mr. Puno also said that this year, First Gen would embark on a debt-reduction program where it plans to wipe out debts amounting to about $500 million. The company reports its figures in dollars, its functional currency. — Victor V. Saulon