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Geothermal plant output largely effecting EDC net income for 1H of 2015

Tongonan, Leyte Geothermal power plant, Philippines
Alexander Richter 2 Sep 2015

Energy Development Corp, expects an increase in net income for the second half year of 2015, due to planned retrofit of the Tongonan geothermal plant, the sales from the recently restarted Bacman geothermal plant and start of operation of the Nasulo geothermal plant.

In its results published for the first half of 2015, “Energy Development Corporation reported a Php4.7 billion consolidated recurring net income attributable to equity holder’s of the Parent, down by 14% from the Php5.4 billion posted during the same period last year.

The decrease is mainly due to the outage of the Tongonan Plant, trading losses on the Unified Leyte strip business, higher operating expenses and typhoon repair works being reported for the first two quarters, and lower output and higher income tax of Pantabangan-Masiway, owing to the end of its income tax holiday last April 2014.

Inclusive of non-recurring items, consolidated net income attributable to equity holders of the Parent stood at Php4.6 billion in the first half of 2015, 27% lower compared with the Php6.3 billion recorded during the same period last year.

Consolidated revenues amounted to Php16.8 billion, up by Php1.6 billion, or 10%, from the Php15.2 billion recorded during the same period in 2014. The improvement was largely due to higher energy sales from the newly rehabilitated Bacman power plants and the newly commissioned Nasulo Geothermal and Burgos Wind power plants — commissioned only during the latter part of 2014. Revenues from Bacman’s Unit 1, 2 and 3 power plants increased by Php0.7 billion while Nasulo and Burgos Wind power plants contributed Php0.7 billion and Php0.9 billion, respectively. Outages in the Tongonan Plants, together with lower prices for both Tongonan and Palinpinon Plants, partially negated the rise in total revenues.

“Our 1H 2015 results fell short of target due to reliability issues at Tongonan Geothermal Power Plant,” Richard Tantoco EDC President and COO said. “These setbacks are significant but temporary as the turbine retrofit of Tongonan will commence 3Q 2016 and similar to Bacman, we expect to boost reliability and increase plant output,” he added.

Higher operating and depreciation expenses were incurred primarily for the newly commissioned Nasulo and Burgos Projects as well as additional expenditures for improving EDC own equipment and infrastructure’s resiliency to harsh weather conditions, which the company calls “typhoon proofing” opex and capex program.

As of the first six months of 2015, the Company’s cash balance stood at Php15.4 billion while maintaining a comfortable gearing level with consolidated net debt to equity of 1.17 to 1 and consolidated net debt to EBITDA of 3.06 to 1.”

Source: EDC release