First Gen posts 16% earnings hike in Q1

By Honey Madrilejos-Reyes
Reporter

HIGHER fuel charges and cost savings resulted in a 16-percent growth in the first quarter net profit of First Gen Corp. to $25.5 million compared to the $22 million posted in the same period last year.

Company senior vice president and chief finance officer Giles Puno said the recent increases in fuel prices translated to higher fuel charges to its major customer Manila Electric Co. (Meralco), allowing them to end the period with revenues of $217 million.

“Apart from the fuel charges, there was also the $4-million cost savings from lower administrative expenses and taxes as well as reduced professional fees incurred from the settlement with our plant’s contractor Siemens,” he said.

For the full year, however, Puno said they are expecting flat to minimal growth in bottom line as tax incentives awarded to its 1,000-megawatt Sta. Rita gas-fired power plant will expire at the end of this month.

“The revenues will continue to be there but the forthcoming increase in our taxes once the incentives are lifted will put pressure on our net profit unless we deliver growth,” he explained.

Analysts earlier projected net profit of First Gen—the country’s third- largest power producer—to level at around $83 million by the end of the year. Last year, the company’s audited net profit was $87 million.

Listed at the stock exchange in February, the company held its first stockholders meeting Wednesday, where it declared a cash dividend of P1.75 per share on all outstanding common shares in favor of stockholders of record as of June 2, 2006. Payment date has been set on June 16.

The cash dividend is 2-percent higher than its dividend policy of 30 percent of prior year’s recurring net income.

According to Puno, the policy could be raised to 50 percent if the company continues to register higher income from operations.

Shares of First Gen on Wednesday rose P2, or 4.3 percent, to P48.50, above its IPO price of P47.

Controlled by the Lopez family, First Gen operates gas-fired power facilities in Luzon, with an aggregate capacity of 1,500 MW. By 2010, power generated by its gas plants will go up to 2,000 MW with the completion of its San Gabriel power facility in Batangas City.

http://www.businessmirror.com.ph/0511/comp01.php