In a disclosure to the Philippine Stock Exchange, AboitizPower said its core net income also dropped by 23 percent to P9.9 billion from P12.9 billion.
The company said it benefited from nonrecurring gains, including an amount of P143 million from the revaluation of consolidated dollar-denominated loans and placements, and P527 million in one-off gains, net of tax from revenue adjustments in a wholly owned subsidiary in the first quarter resulting from a favorable ruling by the industry regulator regarding its tariff structure and the cost recovery by an associate company relating to its fuel importation in the second quarter.
AboitizPower said its generation business contributed P10.2 billion in the first half from P12.8 billion in the same period last year.
The company’s power-generation business accounts for 91 percent of the earnings contributions. Once adjusted for one-off items, AboitizPower’s generation business registered close to P9.5 billion or 27-percent lower compared with that of last year.
AboitizPower attributed the earnings drop to lower prevailing prices at the Wholesale Electricity Spot Market (WESM), compared with 2010 prices.
The average price of electricity in the WESM dropped by 55 percent for the period, due largely to demand and supply conditions, specifically the low demand for electricity in Luzon.
AboitizPower noted that there was also a 7-percent drop decline in year-to-date net generation to 4,640 gigawatt-hours (GWh) in the first half from 4,984 GWh in 2010.
Ancillary services provided a buffer to the power generation group’s earnings. AboitizPower said its merchant hydro assets were able to pull in strong bottomline performance, due to improved water levels, increased acceptance levels for the nominated capacities made by the Magat hydro plant, and the additional fresh nominated capacities of the Binga hydro plant.
As of end-June, AboitizPower’s capacity stood at 2,331 megawatts (MW) due to the completion of the 16.5-MW plant A of Hedcor Sibulan in July 2010 and of the last unit (or 82 MW) of the 26-percent AboitizPower-owned Cebu coal power plant.
AboitizPower said it also assumed full ownership and control over the 70-MW Bakun hydro facility in May 2011, acquired the 242-MW power barges in Navotas in May, and partially completed the rehabilitation of the Ambuklao hydropower facility in June.
“Favorable developments with respect to our greenfield hydro projects, the recent rebirth of the Ambuklao Hydro, as well as the significant strides made by the Subic and Davao clean-coal greenfield plants are demonstrating that AboitizPower’s project development pipeline is full and will provide earnings growth over the next few years,” Erramon Aboitiz, AboitizPower president and chief executive, said.
He added that the recent acquisition of the Navotas barges will also provide an interesting flexibility to our portfolio of assets.
Aboitiz further noted that their recent agreement with Meralco PowerGen Corp.—the power generation arm of Manila Electric Co. (Meralco)—will not only add scale to the Subic coal-fired power plant but will also allow the company to make it more efficient and competitive over the long term.
(Paul Anthony A. Isla)
