GPSC breaks the Covid-19 crisis with net profit in Q1/2020, 68% growth, reached THB 1,580 million. Catch up with Q2 economy, continually invest in all projects as planned.
GPSC shows Q1/2020 revenue surpassing THB 18,308 million, increased by 102%. Resulting in a net profit of THB 1,580 million, increased by THB 638 million with 68% growth, compared to the same period last year. Positive results from electricity sales increase and full quarter recognition of GLOW’s performance. Sticks closely to the Covid-19 crisis in Q2/2020, continually invest in all projects as planned. Confidence in synergy, integrate 2 organizations to become one after the organizational restructuring from 1 April 2020, ready to generate value added in the year 2020 by THB 400 - 500 million.
Mr. Chawalit Tippawanich, President and Chief Executive Officer of Global Power Synergy Public Company Limited or GPSC, the innovative power flagship of PTT Group, reveals that, regarding the performance results of the first quarter of this year, the company had total revenue of THB 18,308 million, increased by THB 9,241 million or 102% growth, compared to the same period last year. With a net profit of THB 1,580 million, increased by THB 638 million or an increase of 68% compared to the same period last year, was due to the increase in electricity and utility sales from the full quarter recognition of performance of and Glow Energy Public Company Limited (GLOW), compared to the same period last year that had only 18 days for revenue recognition.
In this regard, the main revenue came from the electricity sales such as the Independent Power Producer (IPP), increased by THB 2,864 million, especially from Sriracha power plant that increased by THB 461 million, due to the dispatch instruction of electricity from the Electricity Generating Authority of Thailand (EGAT). Recognition of revenue from all 3 IPPs of GLOW increased by THB 2,403 million, as the first quarter of 2019 revenue was recognized for 18 days only. Small power plants (SPP) revenue increased by THB 6,390 million from the full revenue recognition from GLOW. However, revenue of very small power plants (VSPP) slightly decreased by THB 13 million.
However, when compared to the Q4/2019 performance results of the company, the revenue increased by THB 29 million or 0.2% growth due to the IPP power plants had no planned maintenance shutdown resulting in the increase of Availability Payment (AP) which the revenue from the GHECO-One Power Plant increased by THB 132 million. While SPP power plants had a decrease in revenue from electricity and steam sales for the industrial customers, by THB 764 million, due to the lower natural gas price and customers’ plant maintenance shutdown as planned. VSPP power plant’s revenue increased by THB 3 million because of an increase in electricity sales of Ichinoseki power plant 1 GK (ISP1) and electricity and water sales from Combined Heat and Power Producing Company Limited (CHPP).
The Q1/2020 net profit, compared to Q4/2019, increased by 435 million THB or 38% growth from higher Availability Payment of the Sriracha and GHECO-One Power Plant, resulting from no planned maintenance shutdown in Q1/2020, and an increase in gross profit of SPP power plants, resulting from the decrease in price of natural gas and coal corresponding to the crude oil price in the world market. In addition, the maintenance cost decreased because there was no planned maintenance shutdown the same as the fourth quarter of last year, as well as a decrease in the financial cost after financial restructuring according to the short-term loan repayment plan during the fourth quarter of last year.
"The company had increased revenue as mentioned above, resulting in a significant increase in net income, even the company had an increase in income tax expenses in the first quarter, which came from the deferred income tax expenses from the implementation of Thai Financial Reporting Standards regarding the lease agreements (TFRS 16)," Mr. Chawalit said.
However, the impact of the outbreak of the Covid-19, may cause the overall economic downturn to all sectors, leads the company to conduct a close survey and monitor the client's operations plans. The initial survey found that most customers still maintain their demand for electricity and steam similar to the previous period thus the company can continue production as planned. In accordance with implementing measures that create continuous stability in the electricity and utility systems by executing a Business Continuity Plan (BCP) and special control workplaces (Safe House) for the operation staffs and the Work From Home (WFH) of the production support staffs. The company will continually execute measures until the pandemic is resolved.
For this year's business plan, the company is ready to move forward with the new organizational structure, effective from 1 April 2020 onwards. After the acquisition, GLOW became one part of the GPSC Group of companies under the same organizational management. Business strength is aimed to be generated by executing a synergy plan for Efficiency, Availability and Reliability in delivering electricity and steam. The synergy value of both companies in 2020 is expected to recognize the synergy value approximately THB 400 - 500 million, from the power plant and network management as well as the maintenance section that will have an effective long-term maintenance contract management, expected to reduce operating costs. In addition, there is an increase in efficiency in procurement plans, cost management and inventory cost reduction. More discounts from economies of scale with effective procurement. Moreover, finance cost, insurance and working capital management and organizational management to reduce costs. As a result, the company has evaluated preliminary synergy which will occur during the year 2019 - 2024, in which is expected to gradually increase until the value can be recognized at approximately Baht 1,600 million in 2024.
"Although most of the company's customers are petrochemical companies, indicating that they do not currently have a reduction plan according to COVID-19 but the economic slowdown may cause industrial customers to be affected in the future. The company has to closely monitor the situation in the 2nd quarter onwards", Mr. Chawalit said.
Plans to proceed the development of all steam and power plant projects have been ongoing as planned i.e. The Nava Nakorn Electricity Generation (NNEG) Expansion Project with targeted 18 MW production capacity has been developed and expected to be commercially operating in the third quarter of 2020. The waste to energy power plant with a capacity of 9.8 MW will be commercially operating in the second quarter of 2021. The Energy Recovery Unit (ERU) power plant project, utilizing waste oil residue from the refining process to be fuel for power plants with capacity of 250 MW of electricity and 175 tons per hour of steam, have progress in both engineering design and foundation construction, despite facing some difficulties due to the Covid-19 pandemic. However, the company has expected to manage this project to be completed as planned and will commence commercially operating in 2023.