SMPC ready for economic impact of pandemic–exec

By Lenie Lectura – July 6, 2020
from Business Mirror

Consunji-led Semirara Mining and Power Corp. (SMPC) said it would still be able to carry out minimum dividend payout and trim debts amid the prevailing conditions and continuing risks presented by Covid-19.

SMPC Chairman Isidro Consunji said the company remains cash-flow positive even if it is not spared from lower market prices and weak demand.

“While this puts some strain on our liquidity, we are fortunate to remain cash flow-positive. Barring any unforeseen circumstances, I am confident that we can meet our obligations to our shareholders, creditors and other stakeholders.

“Based on our current cashflow, I believe we can meet our minimum dividend obligation to our shareholders next year,” said Consunji during the company’s virtual stockholders’ meeting.

SMPC proceeded with paying out P5.3 billion in cash dividends to shareholders at the start of the enhanced community quarantine (ECQ). Consunji said the move was beyond the company’s cash dividend policy of at least 20 percent of the prior year’s audited net income.

“However, it will take some time before we can return to the profit and dividend levels that we are used to, given the prevailing conditions and continuing risks presented by Covid-19,” he added.

The company’s net income at end-2019 declined by 20 percent year-on-year to P9.6 billion, from P12.1 billion due to depressed global coal prices and power plant outages. It has yet to report its first quarter financial performance.

The company has decided to reschedule its P3.7-billion capital expenditure (capex) from 2020 to 2021. It would also defer hiring for non-core positions, reduce non-essential business expenses and dispose of noncore assets.

“Implementing these measures will allow us to preserve and generate cash, which we intend to use to meet our stakeholder obligations,” Consunji said.

At the end of the first quarter, the company’s short-term loans stood at P5 billion and P16 billion in long-term debt. “We intend to pare down this year using internally generated cash.”

Should the pandemic and the economy worsen, he said the company could tap unused credit lines. “Our company is well prepared for the challenges ahead. And while we have additional credit lines, we hope that there will be no need for us to use it.”