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NEWS UPDATES 30 July 2010

Acquisitions triple earnings

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Energy Development Corp. (EDC), expects to nearly triple its earnings this year on the back of a projected increase in electricity sales from its acquisitions. In briefing Thursday, Richard Tantoco, EDC president and chief operating officer, said the company’s full-year net income may fall between P8.7 billion and P9.1 billion, as projected by analysts.

“We are headed towards close to that,” he told the Manila Times.

Last year, EDC registered P3.3 billion in earnings from its portfolio of geothermal and hydroelectric power plants.

The company has already surpassed this figure in the first six months of the year when it booked a profit of P5.7 billion.

For the rest of 2010, however, Tantoco said that EDC expects its profit growth to taper off and land near analysts’ projections owing to the seasonality of demand for electricity.

“We tend to have peak demand in the summer months,” he said.

The projected jump in its 2010 profit would be borne out of the full-year operations of its recent acquisitions.

It would be recalled that EDC took over the 112.5-megawatt Tongonan and 192.5-megawatt Palinpinon geothermal power plants in October last year after the firm won the facilities for $220 million in a state auction.

In June 2009, EDC also gained control over two geothermal plants with a combined capacity of 106-megawatts in Mindanao.

EDC also topped the bidding for the 150-megawatt Bacon-Manito geothermal plants in Sorsogon, with an offer of $28.25 million. The facility, however, would require two years of rehabilitation.

The company’s total geothermal power generating capacity is currently placed at 1,116 megawatts, representing 62 percent of the country’s installed geothermal capacity.

EDC also owns and operates the 122-megawatt Pantabangan-Masi way hydro-electric plants.

Tantoco said the company plans to increase its generation portfolio by 38 percent over a five-year period starting in 2011 after completing the rehabilitation of some of its geothermal facilities. The power firm has already programmed P20.6 billion for the rehabilitation of its existing plants.

Tantoco said EDC does not need to raise additional funds for the rehabilitation program as it already generated enough cash from its bond issuance earlier. The company also has a healthy cash standing, with P6 billion in its coffers.

EDC expects to spend $1 billion or around P46 billion for the construction of new power plants.

“The expansion will be funded 30-percent equity and 70-percent debt,” he said.

Tantoco said that EDC would only raise funds this year for its expansion program should the Burgos project kick off.

“There is no need for fund raising this year. If the Burgos project moves, we might raise probably $100 million to finance that,” he said.

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