Semirara’s profit declined 28% in 3 months on weaker market prices

By Alena Mae S. Flores – May 6, 2024, 9:50 pm
from manilastandard.net

Semirara Mining and Power Corp. (SMPC) said Monday its net income fell 28 percent in the first quarter of 2024 to P6.5 billion from P9 billion a year earlier due to weaker market prices which muted the impact of higher coal shipments and energy sales volume.

“While we faced some pricing challenges this quarter, our robust export sales and improved plant performance demonstrate the resilience and adaptability of our operations,” said SMPC president and chief operating officer Maria Cristina Gotianun in a disclosure to the Philippine Stock Exchange.

SMPC said coal indices declined on weak demand from developed countries, driven by changes in energy policies, a shift toward renewable sources and slowing economic activities.

The Newcastle index plunged 49 percent from an average of $247.8 to $126, while the Indonesian Coal Index 4 (ICI4) retreated 25 percent from an average of $76.5 to $57.2.

Average spot prices in the Luzon-Visayas electricity market fell 27 percent from P6.28 to P4.61 on lower fuel costs and increased supply.

“Overall, we expect 2024 to be a pivotal period for our company. As market prices and demand stabilize, our focus shifts towards boosting coal exports and plant availability, while implementing novel cost-management strategies,” Gotianun said during the company’s annual stockholders’ meeting.

She said SMPC expects Sem Calaca Power Corp. unit 2 to operate at full capacity of 300 megawatts in the second half, assuming a successful and timely generator swap.

The plant was operating at an average capacity of 175 MW in 2023.

“We anticipate strong performance from the power segment, potentially offsetting anticipated weakness in the coal business due to unfavorable market conditions,” Gotianun said.

She said a 12-MW wind farm on Semirara Island would commence operation in the first quarter of 2025, and SMPC anticipates annual savings of P200 million by sourcing energy from this facility, which would also help reduce emissions.

“2024 presents a landscape of opportunities and challenges. Our ability to adapt and execute effectively will define our trajectory and directly influence our financial results.

While management cannot guarantee specific outcomes, we would like to assure you that we are well-prepared and firmly committed to enhancing the value of our company,” she said.

SMPC’s coal sales jumped 37 percent from 3.5 million metric tons (MMT) in the first quarter to 4.8 MMT largely driven by exports which accelerated 78 percent from 1.5 MMT to 2.7 MMT.

Domestic shipments grew 6 percent from 2 MMT to 2.1 MMT, influenced by an uptick in internal sales due to the 92-percent plant availability, the highest in the company’s history.

Gross generation increased 7 percent from 1,316 gigawatt hours (GWh) to 1,408 GWh, while electricity sales volume also rose 3 percent from 1,241 GWh to 1,281 GWh on higher bilateral contract quantity (BCQ) sales, which offset the decline in spot market dispatch for the period.

Meanwhile, average selling price (ASP) for Semirara coal shrank 33 percent from P4,427 per metric ton (MT) to P2,978 per MT.