Semirara Mining and Power Corp. is postponing its capital spending worth P3.7 billion until next year as the coronavirus disease 2019 (Covid-19) pandemic continues to disrupt economic activities, affecting companies here and abroad.
“Consistent with our disciplined and prudent approach to managing our company, we are rescheduling [the] P3.7 billion worth of capex (capital expenditures) to 2021,” Semirara Mining Chairman and Chief Executive Officer Isidro Consunji said during the listed firm’s virtual annual stockholders meeting.
Semirara Mining will reduce nonbusiness expenses, dispose noncore assets and defer hiring people for noncore positions to safeguard its long-term viability.
“Implementing these measures will allow us to preserve and generate cash, which we intend to use to meet our stakeholder obligations,” Consunji said on Friday.
Although largely unaffected by the lockdown imposed by the government due to the essential nature of their businesses, Semirara Mining is facing unprecedented disruption and difficulties because of the pandemic. It is also susceptible to weak demand and lower market prices.
But according to Consunji, his firm is well-positioned to weather the pandemic’s impact on its operations, attributing it to a healthy balance sheet, and remains cash flow-positive.
“Given the market situation today and in the immediate future, which is highly unpredictable, we don’t see the company perform better in financial terms,” he said, adding that the company could “keep afloat” in these challenging times.
“2020 will be a very difficult year for all of us. But we have laid a strong foundation, and with your steadfast cooperation, we can emerge from this pandemic even stronger,” Semirara Mining President and Chief Operating Officer Maria Cristina Gotianun told shareholders.
Semirara Mining reported a consolidated net income of P9.6 billion last year, down 19.5 percent from P12.1 billion in 2018 on the back of lower coal prices and shutdown of some of its power plants.
In the first quarter of 2020, the listed firm posted a 43-percent plunge in net income, which it blamed on the drop in coal and energy prices, as well as power outages during the period.
Semirara Mining shares rose by 6 centavos or 0.47 percent to close at P12.70 each on Friday.