Lower coal prices pull down Semirara income

Weaker coal prices and higher expenses in doing business hit tycoon Isidro Consunji’s Semirara Mining and Power Corp. (SMPC) in the January to September period as net income plunged 31 percent.

In a disclosure on Wednesday, the group said earnings fell to P15.71 billion from P22.62 billion a year ago.

Revenues during the period in review also dropped by 12 percent to P49.67 billion against the previous P56.2 billion.

Cash flow as measured by earnings before interest, taxes, depreciation, and amortization (Ebitda) stood at P21.57 billion, 23-percent down from P27.93 billion.

SMPC pinned the blame for its weaker financial performance on lower selling prices and higher cash and noncash costs.

“As anticipated, stabilizing market prices exerted pressure on our margins,” said SMPC president and chief operating officer Maria Cristina Gotianun.

In the third quarter, the company’s average selling price fell 15 percent to P2,811 per metric ton (MT) from P3,315 per MT, which was made worse by stronger demand for lower-grade coal.

However, SMPC said shipment increased, with total sales volume growing by 16 percent to 2.9 million metric tons (MMT) from 2.5 MMT. The bulk or 88 percent of exports were sent to China. South Korea and Brunei followed, accounting for 7 percent and 5 percent of the sales, respectively.

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Meanwhile, the cash component of SMPC’s cost of sales—or the money spent to produce the products—climbed 13 percent to P20.31 billion from P17.98 billion, due to increased shipments, labor, materials and fuel consumption.

Operating expenses likewise ended higher at P3.41 billion, up 16 percent from P2.94 a year ago.

Its power sales, on the other hand, jumped 10 percent to 1,213 gigawatt hours (GWh) from 1,099 GWh. Total gross generation also improved by 12 percent to 1,308 GWh on better output from both SEM-Calaca Power Corporation and Southwest Luzon Power Generation Corporation plants.

“For the remainder of the year, we expect coal and electricity prices to remain stable. Our focus is on meeting our coal production target of 16 million metric tons and achieving a balance in our contracted generation capacity mix,” Gotianun said.