Aboitiz Power reported 14% profit drop in ’11

Aboitiz Power Corp. saw its bottomline drop 14 percent year-on-year in 2011 to P21.6 billion from P25 billion.

This translated to earnings per share of P2.94.

Although its power distribution group expanded earnings, the company’s power generation business suffered from lower average selling prices due to the “softening” at the Luzon spot market.

Aboitiz Power president and CEO Erramon Aboitiz said in a statement that the company expects “organic growth,” increased generating capacity, and a pick-up in electricity consumption in 2012 along with overall growth in the Philippine economy.

“The strength of our power business lies in our diversified, complementary and competitive portfolio of generating assets. We have also been able to mitigate earnings volatility through our contracting strategy. We are confident that this, couple with our experienced management team, provides us with the ingredients necessary to thrive in a more challenging environment with the onset of more competition, open access, and the full implementation of Wholesale Electricity Spot Market (WESM) nationwide,” Aboitiz said.

Aboitiz Power revealed that it booked a non-recurring loss of P160 million on the revaluation of consolidated dollar-denominated loans and placements resulted.

The company also booked a P663-million one-off gain related to adjustments in various transactions and recovered costs. Adjusting for these one-offs, Aboitiz Power’s core net income for 2011 amounted to P21.1 billion, down 14 percent from 2010.

For the fourth quarter alone, Aboitiz Power recorded a consolidated net income of P5.4 billion, down 17 percent from the previous year. Core net income for the fourth quarter reached P5.6 billion, 14 percent lower than the same period in 2010.

Aboitiz Power’s generation business contributed P20.4 billion of Aboitiz Power’s income for 2011—down 16 percent year-on-year.

The company said that, taking out one-off items, its generation business shored in P19.8 billion, 16 percent lower than last year.

Aboitiz Power also said its generation business logged a 7 percent year-on-year drop in average selling prices due to the “softening” of spot market prices compared with 2010 levels.

It noted a 41-percent annual decline in the average price of electricity in the Luzon spot market.

Demand for electricity remained relatively flat against that of the previous year, it said.

Both demand and supply conditions that prevailed during the year were responsible for the recorded 41 percent year-on-year drop in the average price of electricity at the Wholesale Electricity Spot Market (WESM) in Luzon. Demand for electricity remained relatively flat compared to 2010.

As of end-2011, Aboitiz Power’s attributable capacity was at 2,350 megawatts (MW), up by 15 percent year-on-year. The expansion was due to the assumption of full ownership and control of the 70-MW Bakun hydro run-of-river plant in May; the acquisition of the 242-MW Navotas power barges in May; the full completion of the rehabilitation of the Ambuklao hydro facility in September; the completion of the 4-MW Irisan hydro greenfield project also in September; and, the partial completion of rehabilitation work at the Binga hydro facility.

Looking forward, Aboitiz said, “We will continue to expand our generating capacity through brownfield and greenfield projects… We expect to add approximately 700 MW of additional attributable capacity between 2012 and 2015.”

In power distribution, Aboitiz Power registered a 25-percent earnings hike to P2.4 billion in 2011, from P1.9 billion in 2010, on the back of increased electricity sales and improved average gross margin.

Total attributable electricity sales increased by 3 percent annually to 3,727 GWh from 3,606 GWh.

Leading the pack was the industrial segment, recording a 6-percent year-on-year growth, while residential and commercial accounts posted marginal declines during the year.

The group’s average gross margin for 2011 improved by 15 percent year on year to P1.44 per kilowatt hour (kwhr).