July 30, 2015

Aboitiz Power Corp (AP)’s 2Q15 core earnings down 9% YoY

Aboitiz Power Corp (AP) disclosed today that it posted a 9% YoY decline in 2Q15 core net income to P3.8b, thus bringing 1H15 core earnings to P8.2b which reflects a 5% YoY decrease. Inclusive of one-offs (which consist mainly of gains/losses from the revaluation of consolidated dollar-denominated liabilities and placements), reported net income decreased by 23% to P3.7b in 2Q15 and 10% to P8b in 1H15.

The power generation business contributed core net profits of P3.0b in 2Q15, 9% lower than the P3.5b registered a year ago. The decline in earnings was mainly attributed to weaker sales from Tiwi-Makban geothermal power plants due to lower available steam flow during the period, and higher operating expenses at Therma Luzon Inc’s Pagbilao coal-fired power plant and Therma Marine Inc’s Mindanao power barges.

On the other hand, the power distribution group posted weaker an 11% increase in 2Q15 net profits to P916m on the back of a 9% rise in volume salees. For the first semester, the power generation and distribution businesses contributed core net profits of P6.6b (down 9%) and P1.7b (up 20%), respectively. We expect to get more details on the results in the analysts’ briefing this afternoon.

Our take: While the results account for just 44% of our full-year estimate of P18.14b and consensus forecast of P18.32b, note that this year’s earnings growth is back-ended with a recovery expected in 2H15 given the recent commissioning of one unit of AP’s 2 x 150 MW Davao coal-fired power plant in June. If we were to exclude the profit contribution from AP’s Davao plant this year, AP’s 1H15 results account for 48% of our full year estimate. – WealthSec