In a disclosure to the Philippine Stock Exchange on Friday, AboitizPower said its power-generation business recorded an income contribution of P4.9 billion in the first quarter of the year, or a decline of 35 percent.
Fortunately, according to Erramon Aboitiz, AboitizPower president and chief executive, the adverse impact on earnings was tempered by its lower exposure in the Wholesale Electricity Spot Market (WESM) with the increase in the group’s contracted capacity through bilateral agreements.
“AboitizPower’s reduced dependence on the spot market has cushioned it from the substantial drop in average WESM prices. We will continue with our strategy to contract our base-load capacity with long-term bilateral contracts and reserve our large hydro capacity for ancillary contracts,” Aboitiz said.
The drop in net income amounts to an earnings per share of P0.69 for the first quarter of 2011.
Core net income, excluding non-recurring items, for the first quarter totaled P4.7 billion, which is 34 percent lower year-on-year, it said.
AboitizPower recorded a P107-million nonrecurring income for the first quarter—lower than the P404 million recorded for the same quarter in 2010—due to the revaluation of consolidated dollar-denominated loans and placements.
In the same quarter, AboitizPower said its wholly owned subsidiary, Therma Marine Inc. (TMI), reported a non-recurring gain of P348 million, which was a result of the Energy Regulatory Commission’s (ERC) favorable ruling, issued in March 2011, regarding TMI’s tariff structure for its ancillary services contract with the National Grid Corp. of the Philippines.
The ERC ruling allowed TMI to make revenue adjustments relating to ancillary services rendered in 2010.
“I believe AboitizPower is in a great position given our diversified and complementary generation portfolio and the various greenfield projects we are developing. We continue to steadfastly pursue reliable energy solutions to meet the rising power-supply demands of the country,” Aboitiz said.
The company also cited lower demand for electricity in the first three months of the year due to the cooler climate for its performance.
But AboitizPower pointed out the growth in the ancillary services provided by its merchant hydro assets, with a recorded 311 percent year-on-year volume expansion during the quarter.
(Paul Anthony A. Isla)
