SMPC Q2 net income dips 5% to P10.2B; delivers second-best H1 earnings of P19.2B

By: Philippine Resources August 14, 2023

Integrated energy company Semirara Mining and Power Corporation (SMPC) reported P10.2 billion in net income in the second quarter, a 5-percent downtick from its record high of P10.8 billion last year.

Despite significant corrections in global coal index prices and the impact of high base effect, SMPC delivered robust financial results because of higher coal shipments, improved plant availability and increased electricity sales at elevated prices.

Quarter-over-quarter (Q1 2023 vs Q2 2023), SMPC net income even grew by 13 percent from P9 billion.

For the first six months of the year, SMPC earnings dropped by 26 percent from P25.8 billion to P19.2 billion mainly due to high base effect and normalizing coal indices.

From January to June, average Newcastle price plunged by 54 percent from US$320.3 to US$148.9, while average ICI4 price dropped by 17 percent from US$85.7 to US$71.

“Even with lower coal prices, we delivered our second-best first half results because of China demand recovery and the improved performance of Sem-Calaca Power Corporation [SCPC] Unit 2,” said SMPC president and COO Maria Cristina C. Gotianun.

“The second half will be challenging because of the rainy season and planned shutdown of our three power plants but with our high starting inventory and strategic pivot to the spot market, we believe we can weather these headwinds,” she added.

Coal Operating Results

In the second quarter alone, total shipments increased by 22 percent from 3.7 million metric tons (MMT) to 4.5 MMT on higher deliveries to China and South Korea.

Shipments to China increased by 75 percent from 0.8 MMT to 1.4 MMT, while shipments to South Korea rose by 21 percent from 0.8 MMT to 1.0 MMT.

Domestic sales were flat at 1.9 MMT as lower demand from cement factories (-33%) and other industrial plants (-50%) offset the 14-percent increase in sale to SMPC-owned plants.

During the same period, Semirara coal average selling price (ASP) declined by 23 precent from its all-time high of P5,399 per metric ton (MT) to P4,151 per MT.

Total production declined by 12 percent from 3.4 MMT to 3.0 MMT due to the onset of rains and ongoing stripping activities in Molave South Block 6 and Narra North Block 1.

Total inventory grew by 12 percent from 2.5 MMT to 2.8 MMT on stable production and weaker domestic sales. Year-to-date, inventory rose by 40 percent from 2.0 MMT to 2.8 MMT.

Power Operating Results

Overall plant availability from April to June surged by 25 percent from 64% to 80% on the improved availability of SCPC Unit 2. Its commercial operation last October 9, 2022 boosted total average capacity by 35 percent from 509 megawatts (MW) to 685 MW.

In turn, total gross generation improved by 27 percent from 956 gigawatt hours (GWh) to 1,212 GWh, driving up total power sales by 22 percent from 900 GWh to 1,097 GWh. Bulk (66%) of total sales went to the spot market.

With higher uncontracted capacity and strong demand due to warm temperatures, spot sales accelerated by 42 percent from 507 GWh to 720 GWh. Meanwhile, bilateral contract sales slipped by 4 percent from 393 GWh to 377 GWh as SMPC maintained its pivot to the spot market.

Overall ASP jumped by 17 percent from P5.30/kilowatt hour (kWh) to P6.22/kWh mainly due to higher spot sales, 3-percent uptick in average spot prices and 40-percent uptrend in average bilateral contract prices.

At the end of the second quarter, only 27 percent of the 710MW dependable capacity of SCPC and SLPGC are contracted. Net of station service, which varies from time to time, the power segment has 462.6MW available for sale to the spot market. 

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