Semirara Mining & Power Corporation nine months of 2020 results showed a significant decline in coal sales. For 9M20 it reported revenue from coal of 11 Billion Pesos. It is a decline of 53% from last year’s 23.3 Billion Pesos.
Semirara Mining and Power Corporation (SCC) is the largest coal miner in the Philippines. It is controlled by the Consunji family through its publicly listed holding company DM Consunji Holdings, Inc. (DMC) which owns 56.63% of the coal miner.
Coal sales volume only declined by 30% overall as compared to the similar period last year. Yet revenue from coal declined 53%. This could be a result of the softness in coal price. Coal price is declining as demand for coal is waning. Environment advocates have called for the phase-out of the use of coal as primary source of power. Such a campaign has been gaining ground.
Just recently, the Department of Energy has declared a moratorium on new coal power plant projects. This may now be the new normal for SCC. Coal exports were also down 49% as compared to last year of a similar period. This suggests that coal demand everywhere is declining.
A weak demand for coal compounds into a weak coal price. This double whammy effect resulted in a 64% decline in the net income of SCC. SCC net income was 8.2 Billion Pesos in 9M2019 but in 9M20 it is only at 3 Billion Pesos. The decline in net income was also reflected in the cash from operations. For 9M20 cash generated from operations was lower at only 4.8 Billion as compared to last year’s 16.9 Billion Pesos.
With low cash generation from operations SCC may have to ask banks to refinance a portion of the 10.8 Billion of borrowings coming due for repayment in the near-term.
The 9M20 results may be a preview of SCC’s new normal.
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