Power companies posted a consolidated earnings growth of 3 percent in the first nine months of the year, a reversal from the 2.6 percent decline in the first half of this year.
Power firms First Gen Corp. and Manila Electric Co. (Meralco) performed better than expected, Semirara Mining and Power Corp.’s performance was in line, while Aboitiz Power Corp. disappointed expectations, Colfinancial.com said.
The online stockbrokerage firm also said power demand was strong in the third quarter, as shown by the 8.2 percent growth in Meralco’s sales volume.
“The power sector also benefited from low base in the third quarter of last year as Semirara suffered from weak coal production due to weather disruptions. Consequently, power companies’ profits marginally declined by a median rate of 0.5 percent in third quarter despite Aboitiz Power continuing to suffer from unplanned outages,” it said.
First Gen fared better than expected as its gas plants had no unplanned outages, with units Energy Development Corp., Avion, and FG Hydro benefitting from higher prices in the Wholesale Electricity Spot Market (WESM).
Colfinancial.com said while First Gen’s third quarter profit declined 17.6 percent to $54.6 million, its third quarter 2018 bottom line included a $14-million insurance claim.
“Excluding one-off items, third quarter recurring net income declined by a slower 6.2 percent to $61 million. Nevertheless, nine-month recurring net income reached $217 million, up 21 percent and was higher than expected, representing 109 percent of Colfinancial.com forecast and 96 percent of consensus forecast,” it said.
“The higher than expected earnings was mainly driven by the better than expected performance of the gas plants, EDC and FG Hydro. Gas plants’ earnings increased by 7 percent to $151 million, exceeding forecast. Aside from not suffering from any unplanned outages, the said plants sold power at elevated prices in the WESM,” it added.
Meralco’s nine-month core profit meanwhile rose 10.6 percent to P18.45 billion, ahead of expectations.
Its earnings beat estimates mainly due to higher than expected net distribution revenues, which rose 6.5 percent in the nine months to P49.2 billion, above estimates and representing 77 percent of Colfinancial.com‘s full year forecast.
Meralco’s nine-month sales volume grew faster than expected at 6.3 percent to 35,005 gigawatt hours, 77.6 percent of full year forecast, and as distribution tariff remained flat at P1.41/kilowatt hour, 1.2 percent above forecast, Colfinancial.com said.
As for Semirara, its coal mining business offset the weak performance of its power generation operations, with the third quarter bottom line up 268.8 percent to P2.6 billion, coming from a very low base last year. Last year, Semirara’s coal mining activities were affected by weather disruptions.
Semirara posted a nine-month profit of P8.25 billion, down 4.7 percent.
“Despite the drop, Semirara’s earnings were in line with our expectations at 77.4 percent of Colfinancial.com forecast (although it was still below consensus forecast),” the stockbrokerage firm said.
Semirara’s coal mining operations performed better than expected as the nine-month revenues grew 13.16 percent to P25.75 billion, representing 94.3 percent of full year forecast.
However, Colfinancial.com noted that stronger than expected performance of the coal mining operations merely offset the weak performance of the power generation business.
Power generation revenue dropped 17.7 percent to P10.8 billion while earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 34 percent as the company had to purchase expensive replacement power from the WESM to meet its power supply agreements.
Aboitiz Power’s third quarter core profit at the same time declined 34.7 percent to P5.15 billion, bringing its nine months core profit to P13.7 billion, down 25.6 percent and below estimates.
“Earnings missed estimates as the power generation business suffered from unplanned outages, forcing the company to purchase more expensive replacement power to meet its power supply agreements. Total beneficial EBITDA declined 10.3 percent to P32.9 billion, below estimates, representing only 58.5 percent of our full year forecast,” Colfinancial.com said.
“EBITDA from power generation and retail supply declined 11.5 percent to P28.2 billion, representing only 57.3 percent of Colfinancial.com’s full year forecast. Aboitiz Power’s power distribution business performed in line with expectations,” it added.
