MANILA: Net income of the country’s largest coal producer, Semirara Mining and Power Corp. (SMPC), declined in the first half of the year by 34 percent, to PHP12.6 billion from PHP19.2 billion in the same period in 2023, due to weaker coal prices and higher coal production costs.
In a disclosure to the Philippine Stock Exchange on Friday, SMPC said the company’s second quarter performance further dragged the already weak earnings in the first quarter of the year.
In Q2 2024, earnings declined by 41 percent to PHP6 billion from PHP10.2 billion in the same period a year ago.
In Q1 this year, SMPC’s net income declined by 28 percent, to PHP6.5 billion for the January to March 2024 period from PHP9 billion in Q1 2023.
‘Despite our efforts to manage costs and improve operational efficiencies, the persistent decline in global coal and electricity prices had significantly impacted our financial performance,’ SMPC president and chief operating officer Maria Cristina Gotianun said.
According to the listed firm, a
verage coal prices in the global market fell 16 percent from April to June, with Newcastle Index (NEWC) average decline from USD160.7 to USD135.6, while Indonesian Coal Index 4 (ICI4) also weakened from USD65.1 to USD55.
‘Since the beginning of 2024, oversupply in the Chinese market and economic slowdown risks have impacted coal demand across the Asian region, which accounted for more than 80 percent of global coal consumption in 2023. This resulted in stabilizing coal price indices,’ SMPC told the Philippine News Agency.
‘In China, normalized internal production and a recovery in hydropower generation have further weakened demand. Similarly, in India, cooler temperatures from the monsoon season and increased hydro generation have led to reduced import demand,’ it said.
For the rest of the year, NEWC and ICI4 are expected to hover around USD134 and USD54, respectively, SMPC said.
‘The second half of the year should be more of the same for us in terms of coal prices. We also expect coal production, electri
city demand and spot prices to taper because of the rainy season,’ Gotianun said.
‘Given the key risks and a bearish short-term outlook, management is focusing on strengthening the domestic market and improving operational efficiency to meet the production target of 15.5 to 16 million metric tons, while also meeting mid-calorific value (CV) quality requirements for key Asian markets,’ SMPC said.
Aside from coal mining, SMPC is also engaged in power operations, making the company the only integrated coal and power producer in the country.
Total gross generation in H1 2024 improved by 12 percent to 1,352 gigawatt hours (GWh) from 1,212 GWh in the H1 2023 due to higher plant availability and average capacity of SEM-Calaca Power Corporation (SCPC) as well as the restored capacity of SCPC Unit 2.
This also increased the company’s power sales by 12 percent from 1,097 GWh to 1,228 GWh.
SMPC said 59 percent of its generated capacity was sold to the spot market and the remainder was sold through bilateral contrac
t quantities (BCQ).
Average selling price at the spot market fell by 12 percent to PHP6.25 per kilowatt hour from PHP7.11 per kWh a year ago, while BCQ average increased by 2 percent to PHP4.62 per kWh from PHP4.52 per kWh.
Source: Philippines News Agency