First Gen posts drop in income on lukewarm hydro, geo power sales

First Gen Corp. (First Gen) reported that consolidated net income decreased by 34.3 percent to $180.5 million for the first three quarters of 2015 from $274.9 million during the same period in 2014.

In its financial report, the company attributed the lower profit to less net income contribution of subsidiary Energy Development Corp. (EDC) and its subsidiaries by $100.4 million, or 43.7 percent, primarily due to higher cost of sales, absence of the reversal of the impairment provision in 2014 of EDC’s Northern Negros geothermal project plant assets, decline in revenue contributions from Tongonan due to unplanned outages, higher unrealized foreign exchange losses, higher general and administrative expenses and higher interest expenses, which primarily resulted from the $315 million debt facility secured for Burgos. First Gen also noted higher expenses by 4.7 percent in 2015 due to higher staff costs from ongoing expansion projects, and unrealized foreign exchange losses in 2015.

In terms of net income attributable to equity holders of the parent, First Gen booked $120 million for the first nine months of 2015. This was a 26 percent, or a $43 million, decrease from the $163 million it registered in the same period in 2014.

The decline was due to lower earnings contributions from its geothermal and hydro operations, which were partially offset by higher earnings from its natural gas plants. Recurring net income attributable to the parent was $6 million less, or 4 percent from $135 million in the first three quarters of 2014 to $129 million in 2015.

We expect to end the year with weaker contributions from our geothermal operations, which will be offset by improved dispatch from the Burgos wind project with the transmission constraint addressed. We continue to progress with the construction of the 97MW Avion peaking plant and the 414MW San Gabriel mid-merit plant. We expect to commission Avion by year-end and San Gabriel by the second quarter of 2016. We look forward to reporting improved financial performance in 2016 driven by stronger income across our clean and renewable energy platform,” First Gen president Francis Giles B. Puno said later in a statement.

First Gen’s consolidated revenue from the sale of electricity were relatively flat at $1.4 billion in the first nine months.