AboitizPower Reports P18.4-billion Net Income in 9 Months

MANILA, Philippines–Aboitiz Power Corp. (PSE ticker symbol: AP) has recorded a net income of P18.4 billion (bn) for the first nine months of 2012. This is a 13% year-on-year (YoY) improvement, compared to the P16.2 bn gained during the same period in 2011.

The revaluation of group-wide dollar-denominated loans and placements resulted to a non-recurring gain of P1.2 bn. In addition, AboitizPower logged P668 mn in one-off losses during the nine-month period. With these adjustments, AboitizPower’s core net income as of September 30, 2012 amounted to P17.9 bn, up by 15% YoY.

Focusing on the third quarter of 2012, AboitizPower’s net income was P6.2 bn, a 10% improvement YoY. The strengthening of the Philippine Peso resulted to a P220-mn non-recurring gain due to the revaluation of dollar-denominated liabilities and placements across the group. Netting out one-off items, AboitizPower’s core net income for the third quarter of 2012 was P6.4 bn, which is 13% higher than the same period last year.

“AboitizPower’s third quarter results reflected the higher demand coming from both our generation and distribution businesses. This was further boosted by higher Wholesale Electricity Spot Market (WESM) prices due to higher demand and supply shortage because of several plant outages. We also saw improvement in the distribution margins with the implementation of Performance Based Regulation (PBR) and reduction of systems loss,” AboitizPower president and CEO Erramon Aboitiz said.

“This growth in demand reflects the overall economic growth that our nation is enjoying. AboitizPower is steadfast in our commitment to powering our nation’s future by providing ample power when needed, at the most competitive cost, utilizing the latest technology to allow us to harness power with the least adverse effect to the environment,” Aboitiz said.

Business Segments

Power Generation
The generation business contributed P17.2 bn for the first nine months of the year, accounting for 89% of earnings contributions from AboitizPower’s business segments. This is up 12% YoY. Netting out one-off items, AboitizPower’s generation business earned P16.4 bn for the period, which was 12% higher than last year.

The hotter climate was one of the major factors that led to the increase in power requirements. The group’s average price for its power increased by 6% YoY during the period covering January to September 2012. This was on the back of a 38% YoY rise in average selling price of electricity at the Luzon Grid’s WESM. Supply of power in Luzon was limited given higher outage levels during the period in review.

By the end of September 2012, AboitizPower’s attributable net generation grew by 10% YoY, from 7,175 GWh to 7,903 GWh. This was mainly accounted for by the 15% YoY expansion in power sales through bilateral contracts. On a capacity basis, AboitizPower’s attributable sales increased by 12% YoY, from 1,397 MW to 1,562 MW, given the rising capacity sales through bilateral contracts.

The partial completion of the rehabilitation of the Binga hydropower facilities (2 of 4 units), coupled with the commercial operation of the 4-MW Irisan greenfield run-of-river hydropower plant in Benguet resulted to a marginal increase in AboitizPower’s attributable capacity to 2,353 MW during the period stated.

“AboitizPower continues its focus on developing new greenfield and brownfield projects to better serve the country, and its growing economy,” Aboitiz said. “In Mindanao, construction of the 300-MW Therma South, Inc. (TSI) coal-fired project in Davao has gotten underway. Its commercial operation is expected to come online by the second quarter of 2015. In line with this, the TSI project will utilize clean coal technology for its operations, and will ensure that it meets or exceeds the government’s stringent health, safety, and environment emission standards.”

“Meanwhile, ongoing in Davao del Sur are the construction of two run-of-river hydro projects that have a total installed capacity of 14 MW, which are being developed by Hedcor, Inc. When financially feasible we continue to develop power plants that produce Cleanergy, our brand for clean and renewable energy,” Aboitiz said.

During the third quarter, the power generation business recorded an income contribution of P5.8 bn, a 12% YoY increase compared to the same period in 2011. Overall, tight supply conditions and stronger demand during the quarter in review pushed up the spot market price of electricity at the WESM, resulting to the group’s higher average selling price for the quarter as compared to the same period last year. Meanwhile, net generation level rose by 11% YoY, which was mainly driven by electricity sales via bilateral contracts. When adjusted for non-recurring items, the group registered a 12% YoY rise in its core net income, from P5.2 bn to P5.8 bn.

Power Distribution

The distribution business contributed P2.2 bn as of the end of September 2012, a 24% YoY increase. This resulted from expansions in volumes and margins. Total attributable electricity sales increased by 6% YoY, from 2,764 GWh to 2,935 GWh. Demand from all customer segments continued to grow with the industrial segment recording a 7% YoY expansion in volume sales, while residential and commercial accounts registered 5% and 3% YoY growth, respectively. Gross margin for the group improved by 13% YoY mainly due to the implementation of the distribution utilities’ approved rates under the PBR. Another driver for the group’s enhanced gross margin was the reduced systems loss, with AboitizPower’s wholly owned subsidiary Visayan Electric Co. in particular reducing its level of system loss by 0.7 percentage points, as a result of initiatives implemented during the period in review.

“As the demand for energy grows, AboitizPower’s distribution utilities will contract power to ensure our distribution utilities have ample and competitive power, eliminating the volatility of the WESM and possible shortages of power. We firmly believe that our customers are looking at assured supply of power with as little volatility as possible,” Aboitiz said.

For the period spanning July to September 2012, the power distribution group registered a 5% YoY increase in its income contribution, from P731 mn to P765 mn. AboitizPower’s attributable electricity sales for the quarter ending September 30, 2012 was at 986 GWh, a 4% improvement from last year’s 949 GWh. The strong performance of the distribution group can be attributed to the increase in sales across all customer classes as compared to the same period last year. Gross margin on a group-wide basis improved by 5% YoY, as the approved rates under the PBR scheme were implemented.

Financial Condition

As of September 30, 2012, AboitizPower’s total consolidated assets amounted to P159.9 bn, 4% higher than year-end 2011 level of P153.5 bn. Meanwhile, AboitizPower’s consolidated Cash and Cash Equivalents was registered at P26.8 bn, while total consolidated interest-bearing liabilities were at P68.3 bn. Equity Attributable to Equity Holders of the Parent increased by 13% to P77.1 bn from year-end 2011. As of September 30, 2012, the company’s current ratio was at 3.5x (similar to year-end 2011’s 3.5x), while net debt-to-equity ratio was at 0.5x (versus year-end 2011’s 0.7x).

AboitizPower is the holding company for the Aboitiz Group’s investments in power generation, distribution, retail and power services. It is a major producer of Cleanergy, its brand for clean and renewable energy in the Philippines with several hydroelectric and geothermal assets in its generation portfolio, and also has non-renewable power plants located across the country. The company owns distribution utilities that operate in high-growth areas in Luzon, Visayas and Mindanao. (For more details, please visit: www.aboitizpower.com.)

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