Tycoon Isidro Consunji’s Semirara Mining and Power Corp. (SMPC) suffered a 34-percent drop in earnings in the first half due to weakened coal prices, worsened by greater production costs.
The company said in a disclosure on Friday its bottom line in the January to June period fell to P12.6 billion from P19.2 billion a year ago, with higher shipments and production in the second quarter failing to prop up its profit.
In the second quarter alone, SMPC saw its net income plunge by 41 percent to P6 billion against P10.2 billion in the same period last year.
READ: Semirara Q1 earnings down 28% on lower coal prices
“Despite our efforts to manage costs and improve operational efficiencies, the persistent decline in global coal and electricity prices has significantly impacted our financial performance,” said Maria Cristina Gotianun, SMPC president and chief operating officer.
In an update Saturday, Semirara said its total cash cost in the first six months fell by 6 percent to P19.78 billion from P20.95 billion, “as lower government share partly offset the higher cost of sales and operating expenses, which grew on the back of higher coal production and power generation.”
Coal prices decreased by 16 percent in the quarter ending June, with the average Newcastle Index—the benchmark price for seaborne thermal coal in the Asia-Pacific region—declining to $135.6. The Indonesia Coal Index, meanwhile, also fell to $55.
The average selling price of coal also went down by 33 percent to P2,789 per metric ton (MT) from P4,151 per MT. This happened as coal indices stabilized and the demand shifted to lower-cost, noncommercial grade coal.
Semirara added that spot market prices and fuel costs for baseload plants dipped, pushing electricity prices down by 10 percent to P5.58 per kilowatt hour (kWh) from P6.22 kWh.
In the first half, Semirara said it booked higher coal production and sales volume. Coal production reached 10.2 million MT, an increase of 12 percent from 9.1 million MT. Sales volume, meanwhile, also jumped 18 percent to 9.4 million MT from 8 million MT. Its power sales volume also went up by 7 percent to 2,509 gigawatt hours (GWh) from 2,338 GHh.
According to Gotianun, Semirara might see a similar scenario in the second semester as coal prices continue to descend.
The start of the rainy season, which also signals lower power consumption, may dampen its production. “The second half of the year should be more of the same for us in terms of coal prices. We also expect coal production, electricity demand and spot prices to taper because of the rainy season,” Gotianun said. —With a report from Czashaine Mai Abella