By Victor V. Saulon, Sub-Editor
SEMIRARA Mining and Power Corp. (SMPC) reported a 49% drop in first-quarter net income to P2.33 billion from P4.57 billion as the selling prices of coal and power, the company’s sources of revenues, decreased during the period.
In a disclosure to the stock exchange, the Consunji-led company said the coal segment of the business, net of eliminations, and energy subsidiary Southwest Luzon Power Generation Corp. (SLPGC) contributed P2.13 billion and P226.10 million, respectively. SMPC unit Sem-Calaca Power Corp. (SCPC) posted a net loss of P22.37 million in the first quarter.
The listed integrated energy company said coal production slipped by nearly 2% to 4.06 million tons from 4.12 million tons in the same period last year, with the 37% increase in the strip ratio to 12.53 from 9.12 a year ago.
Export sales rose, lifting total coal sales by 4% to 3.55 million tons compared with 3.42 million tons previously. The drop in global coal prices resulted in an 18% decrease in the average selling price of coal to P2,272 per ton from P2,786 per ton a year ago.
Junalina S. Tabor, SMPC chief finance officer, said this year’s prospects for coal would depend on the China market, which dictates prices.
“Mahirap talaga siya i-predict so much so that our exports is based on spot [prices], depende ’yun sa China market, China traders kung ano talaga what they are offering to us,” she said in a chance interview before the release of the quarterly figures.
“So ’yung Newcastle index is just used as our reference point so alam namin where can we negotiate up to how high, how low,” she said. “But it’s really dictated by China market for the export.”
Energy sales of SCPC and SLPGC increased by 11% to 638 gigawatt-hours (GWh) in the first quarter from 575 GWh in the same period last year. Softer global coal prices also affected power average selling price, which declined by 19% to P4.32 per kilowatt-hour (kWh) from P5.35 per kWh a year ago.
Total power generation during the quarter fell to 508 GWh from 642 GWh, the listed company said. SCPC’s unit 1 is on a six-month life extension program (LEP) since Dec. 30, 2018.
“LEP is a cost-effective strategy to maintain and upgrade operations of existing facilities beyond its traditional lifetime, at the same time to limit environmental complications and financial risks,” the company said.
SCPC’s unit 2 will also undergo LEP as soon as unit 1 becomes commercially available. The plant’s outages and deration during the quarter were due to boiler tube leaks and repair of condenser.
SLPGC’s unit 3 was also down for a total of 29 days in the first quarter, mostly due to boiler issues. Its unit 4 was placed on maintenance shutdown after experiencing tube leaks in mid-January. The incident advanced the planned maintenance shutdown for the middle of the year. There are no other planned outages for the unit for the rest of the year, the company said.
The power segment incurred a total loss of P95 million for purchases of replacement power totaling to 216 GWh in first quarter.
Ms. Tabor said the prospects are better this year because of the higher prices at the spot market, to which the company sells its excess power capacity.
On Tuesday, shares in SMPC closed higher by 3% to close at P22.35 each.