Glow reported that its net profit was Bt3.78 billion and revenue reached Bt33.75 billion.
In a statement, the energy company said that commodity prices continued to rise while electricity tariffs for industrial customers were constrained by the limited increase in the fuel factor (FT). Despite the volatile market, Glow performed well throughout the first nine months of 2008, thanks to its cost saving measures. These included reducing coal consumption by substituting biomass, implementing software to improve efficiency, extending the lifetime of critical parts, and restructuring interest payments.
In fourth quarter, it was affected by the global financial crisis, which depressed results for the full year. Sales to industrial customers in the petrochemical industry slowed down significantly with a reduction in sales of over 25 per cent during the last quarter of 2008. Performance was also affected by unplanned outage of a 150 MW coal-fired unit and delays in completing major maintenance on a 356 MW gas-fired IPP.
Esa Heiskanen, CEO of Glow Group, said "There were two significant factors affecting our performance in 2008: external forces and operational issues. External forces, primarily included FT-Fuel price mismatch, where the Ft adjustment could not cover the rising fuel costs throughout 2008, and decreased industrial customer demand reduced margins by approximately Bt810 million. Operational issues, including forced outage of a 150 MW coal-fired cogeneration unit and a delay in completing major maintenance on a 356 MW gas-fired IPP, impacted fourth quarter results by approximately Bt290 million. Throughout 2008, management has taken measures to limit the overall economic impact, which has had a positive impact of over Bt800 million."
Yet, Glow will go ahead with three on-going projects including 660 MW coal-fired IPP plant 115 MW coal-fired cogeneration plant, and a 382 MW-equivalent gas-fired cogeneration plant. These will increase the company's capacity by approximately 50 per cent by 2011. These three projects will benefit from increased economies of scale and common infrastructure, as they are located in the same site with the existing plants in Map Ta Put Industrial Estate. Furthermore, the new cogeneration units will be the most efficient units in our cogeneration business, and Gheco-One plant will have 25-year Power Purchase Agreement with Egat securing a steady revenue stream.
Glow also expects to acquire a 67.25 per cent stake in the 152 MW Huay Ho Hydro plant in Laos from GDF Suez. The share transfer and the consolidation of the results from this business is expected to take place within the first quarter of 2009.
Suthiwong Kongsiri, Glow Group's CFO, added "The funding for our expansion is very much on track. We have already secured the equivalent of USD 745 million project finance needed for our new IPP project since the fourth quarter. We have already secured Bt3 billion for our cogeneration developments, and are in the advance stages of securing another Bt5 billion. Today, with consolidated net debt to equity ratio of only 0.85 times, we still have sufficient room in our balance sheet to meet our remaining funding needs for 2010 and 2011, an estimated Bt16 billion. We remain confident of our financial strength and our business base".