WHAUP posts solid core operating profit due to strong performance of power business for the first quarter 2020 amid negative factors on Utilities business

Bangkok – WHA Utilities and Power Public Company Limited (WHAUP)reveals its first quarter 2020 performance with Total Revenue and Normalized Share of Profit of THB 662 million and Normalized Net Income of THB 219 million.

Normalized Net Income, which is the key indicator reflecting core operating performance, of the first quarter is 19% decrease from the same period last year. Power business continued to show robust core operating profit, while Utilities business was affected by both drought situations in Thailand and COVID-19 pandemic.

Net Income is affected by net foreign exchange loss derived from translation of USD loan, with loss of THB 178 million in first quarter 2020 comparing to gain of THB 95 million in same period last year. Cash flow of the company is not affect by such foreign exchange loss.

Mr. Niphon Bundechanan, Chief Executive Officer of WHA Utilities and Power Plc or ‘WHAUP’, reveals that “Our power business continued to show strong core operating profit. The Company recorded normalized share of profit of THB 251 million in the first quarter 2020, increasing by 36% on the same period last year. The performance of IPP project continued to be solid, while we start to have contribution from waste-to-energy projects. On SPP business, we currently have 8 projects under commercial operation. During the first quarter, the demand from industrial customers increased around 5%. However, 2 out of 8 projects performed maintenance around 15 days each, resulting into higher maintenance cost. In addition, Electricity Generation of Thailand (EGAT) temporarily reduced power offtake as a result of transmission line maintenance. Therefore, overall SPP power sale volume decreased around 8%. Looking forward, we expect to see recovery in EGAT sale volume, which accounted for 75%-80% of total volume. Industrial customer sale volume may be weakening in the second quarter from lower consumption of automotive sector, with expected recovery toward the second half of the year.”

WHAUP CEO also noted that “Our Utilities business in Thailand was affected by drought situations. The government has implemented mitigation plans to fight the drought situation. On demand side, all sectors, including industrial sector, is asked to reduce demand by 10%. Lower sale volume result into around THB 25 million lower gross profit, comparing to last year. On supply side, we decided to accelerate our investment in reclaimed water plant, increasing capacity from 10,000 to 30,200 cubic meter per day. This additional demand, expected to start operation in June, will help making both water supply more sustainable and enhancing profitability of our Utilities business. This reclaimed water supply capacity will be accounted for around 15% of current demand. We expect gradual recovery of demand in the second half of the year after the drought situation relieved.

With regards to Duong River Water Treatment project in Vietnam, additional 150,000 cubic meter per day capacity (Phase 1B), which started commercial operation in late 2019, has been affected by COVID-19 situation. Incremental demand was delayed from plan mainly from delay of network expansion. As a result, it still contributed share of loss this quarter. However, we expect to see sale volume return back to planned level after COVID-19 situation relieved.”

Mr. Natthapatt Tanboon-ek, Chief Financial Officer of WHAUP adds that “With the rapid weakening of Thai Baht from the end of 2019 to end of first quarter 2020, approximately 2 THB/USD, booking of USD loan in our Power business results in substantial Foreign Exchange Loss recorded in Profit and Loss statement. However, there is no significant impact to our expected return cash flow from these projects, since the revenue increase to offset the effect also. And we don’t consider this Foreign Exchange Gain or Loss as part of Normalized Net Income, which we consider as indicator of our core operating profit.”