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Lopez-led First Gen Q3 profit declines

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FIRST GEN Corp. posted $42.81 million in third-quarter net income attributable to equity holders of the parent firm, down 29% from $60.68 million in the same period last year, the Lopez-led company told the stock exchange.

“Despite the recent calamities like the Batangas and Leyte earthquakes which negatively affected the operations of our gas plants and our largest geothermal facility, First Gen’s recurring [third-quarter] net income only slightly dipped,” said First Gen President and Chief Operating Officer Francis Giles B. Puno.

For the nine months to September, the holding firm for the Lopez family’s power generation and energy businesses said its  attributable net income was at $100.81 million, lower by 42% compared with the $173.78 million earned a year ago.

The company presents its financial report in US dollars, which is its functional currency.

Adjusting for nonrecurring items, First Gen recorded a net income attributable to the parent company of $122.95 million, a 3.6% drop from $127.60 million in the same nine-month period last year.

It identified the nonrecurring items as loan and interest rate swap expenses, typhoon and earthquake-related expenses, proceeds from liquidated damages and insurance claims, input value-added tax claims written-off, one-time gains and losses, movements in deferred income taxes, unrealized foreign exchange differences, and gains on derivative transactions

The holding firm, which produces mostly renewable electricity, said attributable net income was lower than recurring net income by about $22 million “due to the one-time effect of break funding costs incurred as a result of a $500-million refinancing of the 1,000 MW (megawatt) Santa Rita Power Plant’s long-term debt last May 2017.”

First Gen also cited the premium paid for subsidiary Energy Development Corp.’s partial buyback of its US dollar-denominated bond, and the geothermal company’s earthquake-related expenditures, among others.

“Other power plants in the portfolio, like Bacman and Burgos, were able to deliver better profits this year while our newest gas plant San Gabriel recovered in the third quarter. Our merchant natural gas-fired plants have been providing much-needed power these past few months as numerous power plants in the grid went offline due to unexpected and planned outages,” Mr. Puno said.

Consolidated revenues from the sale of electricity increased by 9% to $1.28 billion from $1.17 billion a year ago.

First Gen’s natural gas portfolio made up $778 million or 61% of total consolidated revenues. The portfolio’s revenues were 23% higher mainly because of the new contributions of the 97-MW Avion peaking power plant and the San Gabriel flex plant.

Revenues were partially offset by the slightly lower combined dispatch of Santa Rita and the 500-MW San Lorenzo power plants at 74% as of September as against 79% last year.

The total recurring earnings contribution from First Gen’s natural gas portfolio decreased by $9 million to $85 million largely because of the losses incurred by the San Gabriel and Avion power plants in the first half of 2017.

San Gabriel did not operate during the 20-day Malampaya outage in February, while all of the gas plants temporarily halted operations after an earthquake hit Batangas in April.

EDC’s geothermal, wind and solar revenues accounted for $462 million, or 36% of total consolidated revenues.

Recurring attributable earnings from EDC, excluding First Gen Hydro Power Corp., was almost unchanged at $69 million despite the earthquake, as the 140-MW Bacman plant and the 150-MW Burgos project registered higher earnings.

The 132-MW Pantabangan-Masiway hydroelectric plants’ revenues slipped by 30% to $29 million, or 2% of First Gen’s total consolidated revenues.

FG Hydro’s revenues dropped as its ancillary service contract expired in February 2017. As a result, its recurring attributable earnings contribution was lower by $4 million at $9 million. — Victor V. Saulon

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