ACEN’s gross profit margin turns negative in Q1 2022

ACEN generated revenue from sale of electricity in Q1 2022 of 7.4 billion, an increase of 1.7 billion from last year. But the costs of selling electricity exceed the revenue from the sale of electricity. Costs of sale of electricity were at 7.7 billion pesos. The higher cost of electricity pushed ACEN’s gross profit into the negative.

The culprit of ACEN’s negative profit margin is its coal plant, SLTEC Thermal Plant. ACEN’s SLTEC coal plant had a major maintenance outage during the period. ACEN had to purchase replacement power from the spot market during the SLTEC outage. Spot market prices during that time were elevated.

Despite its clean energy narrative, ACEN still owns fossil fuel power plant that drives its revenue and profit margin. Facts don’t lie.

ACEN’s share price has plunged back to the 6.90 level from its peak of 13.00.

It is curious why ACEN is holding on to its coal plant. Perhaps, it can’t find any takers? The coal plant could be a liability to ACEN for quite some time. It could drag ACEN share price to its bottom.

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