President’s Message

Dear shareholders,

To say 2020 was a challenging year is truly an understatement. In the Philippines, the year started off with the eruption of Taal Volcano (just south of Manila), followed by the news of the outbreak of the COVID-19 pandemic. Then, during the latter half of the year, the country was beset by eight different storms affecting some of our plant sites.

Individually, these events are damaging enough on their own. Taken together, their damages are enough to cause an economic recession. In 2020, the Philippines had its worst economic performance to date since the country began releasing its annual growth data in 1947. According to the Philippine Statistics Authority (PSA), the country’s gross domestic product (GDP) shrank 9.5% in 2020. This, of course, was the inevitable result of the slowdown in economic activity brought about by extended lockdown periods (i.e. the Enhanced Community Quarantine (ECQ) that lasted from March 17 to May 31), and compounded by the onslaught of natural calamities.

As many of you know by now, we at First Philippine Holdings Corporation (FPH), have for some time now

been strong advocates against the existential threat of climate change. For us, it is not surprising to see how the climate crisis has had an invisible yet steady hand in the disasters we are challenged with today. Scientists and researchers have been warning us about how continued global warming and climate change may give rise to new strains of viruses, pathogens, and tropical diseases.

Continued deforestation and habitat loss displace animals and force them to migrate. This, in turn, forces them to come in close contact with human populations they normally wouldn’t, providing ample opportunity for pathogens and new strains of viruses to transfer to humans as their new hosts. Additionally, warmer climates are also more conducive to the development of certain pathogens. The COVID-19 pandemic we are all experiencing now may just be a glimpse into other pandemics to come.

So, while we are all making sacrifices and doing the best we can to stay safe and healthy during this trying time, we would not be able to get to the root cause of the issue if we do not address the climate crisis as well. Remember: there will be a vaccine for COVID-19, but there will be no vaccine for the climate crisis.


In 2020, FPH introduced its re-crafted mission meant to address climate change by “forging collaborative pathways to a decarbonized and regenerative future” and its purpose of creating mutually beneficial relationships with nature and society to benefit our customers, our employees, our suppliers, our environment, our communities, as well as our investors (in accordance with Carol Sanford’s Pentad Framework). This was further concretized in our chosen path centered on a program for First Gen to accelerate and lead the transition towards a decarbonized future of the Philippine energy system. In property, we shall nurture inclusive, well-tempered and creative spaces that elevate surrounding communities and the environment. In construction, we shall build infrastructure that creates resilience and enhances the quality of life in a complex, climate- changed world.

Indeed, it was an interesting time to launch such a bold vision of the future. However, it was exactly in this context of the global pandemic where we can test the clarity and audacity of our vision and the strength of our resolve and commitment as a company. These goals humble us as we intentionally set a high bar for ourselves and we hope we can inspire others to pursue what would be a challenging, exciting, and inspiring journey ahead.

More than anything, our new mission and purpose serve as our guardrails; they direct the way we operate and interact with the world around us. This means that, in any business activity we do, we will remain mindful of our impact on our stakeholders, going beyond doing no harm but finding ways to empower and uplift them. As we have expressed in our Sustainability Policy, we will ensure that as our business progresses, our stakeholders will progress with us. We believe that our new mission is consistent with what the world needs today.

In retrospect, FPH can be described as a typical conglomerate with diverse businesses that may or may not be directly related with each other. Our power generation business, the biggest one in our portfolio, seems like the most logical platform for our decarbonization ambitions. However, we believe

that the concern on climate change is universal, and therefore decarbonization will need to happen too in our other business segments. Decarbonization can happen anywhere, as everything we do leaves a carbon footprint—from our spending habits to what we consume including the vehicles we choose to ride to the food we choose to eat.

The same belief goes with regeneration. While this is a fairly newer concept compared to sustainability and decarbonization, we believe it can be summed up this way. To FPH, regeneration is holistically looking at the bigger systems where our business is embedded— namely society and nature. For us to thrive, we need to keep these systems healthy and resilient.

Since there was no playbook for the COVID-19 disruption, we had the benefit of reverting to our values and beliefs as articulated in our Lopez Credo and values. This re-crafted mission, coupled with our convictions, deepened our resolve and made the journey through 2020 less wearisome. During this trying time, we discovered something fundamental: our people are highly adaptive, and they are committed to our mission.


Like most companies, FPH and its subsidiaries were not spared from the economic disruption brought by the COVID-19 pandemic, as evident in our financial performance.

In 2020, the recurring net income (RNI) attributable to FPH was down by PHP2.6 billion or 21.5% to PHP9.4 billion from PHP12.0 billion in 2019. This was primarily caused by the extended Enhanced Community Quarantine (ECQ) period, which significantly and, I can say, predictably affected the operations of our power, real estate, construction, manufacturing and services businesses.

Total revenues of the Group amounted to PHP107.3 billion, declining by PHP26.3 billion or 19.7% largely due to the following factors:

  • Sale of electricity at First Gen was down by USD321.1 million (~PHP20.6 billion) or 14.9% to USD1.8 billion (~PHP91.3 billion) mainly caused by:
    1. Lower average gas prices by 19.1% or USD1.7/MMBtu (from USD8.9/MMBtu in 2019 to USD7.2/MMBtu in 2020), which significantly brought down the fuel revenues of Santa Rita and San Lorenzo by PHP8.9 billion (or USD178 million), coupled with the reduced combined plant dispatch at 69% in 2020 compared to 76% in 2019;
    2. Our San Gabriel gas plant also registered lower revenues on account of lower capacity fees billed to Meralco especially during the ECQ period. It went through an unfortunate outage in September when its generator was damaged and required repair. We then adjusted the maintenance schedule of the plant to coincide with the time the repair work was undertaken;
    3. In addition, the lower spot market prices and demand have also affected the revenues of Avion, FG Hydro, and even the geothermal plants of EDC. But it is worth noting that the decline in EDC’s revenues from its geothermal plants was partly offset by the higher revenues from Burgos Wind and Burgos Solar on account of the Feed-in Tariff rate escalation that was approved by the ERC, and the better wind regime that further boosted the revenues of Burgos Wind.
  • Sale of real estate dropped by PHP3.6 billion or 33.5% to PHP7.2 billion mainly due to lower reservation sales and construction completion across all the residential development projects of Rockwell Land.
  • Revenues from Contracts and Services likewise fell by PHP1.7 billion or 19.5 % to PHP6.8 billion resulting from
    1. reduced earnings of Rockwell’s commercial leasing and hotel business primarily due to the concessions given to tenants and the partial operations of the mall and hotel business segments during the community quarantine period;
    2. FPIP also posted a decline in water and hotel revenues, particularly during the ECQ period, and
    3. Thermaprime also recognized lower revenues from its drilling contract with the Philippine Geothermal Production Company (PGPC) following the slowdown in drilling activities during the lockdown.
  • Sale of Merchandise went down by PHP466 million or 19.55% to PHP1.9 billion mainly on account of First Philec’s lower sales of distribution (DT) transformers also influenced by the restrictions imposed on manufacturing operations during the ECQ period.

Costs and Expenses:

Costs and expenses totaled PHP80.8 billion, lower by PHP22.2 billion or 21.6% compared to last year’s PHP103.0 billion. Bulk of the decrease was caused by lower fuel expenses, which are complete pass-through charges to Meralco, coupled with the deferment of EDC’s maintenance and drilling activities across its geothermal assets. These were further complemented by lower general and administrative expenses of the group particularly personnel, professional fees, taxes and licenses, and utilities expenses during the year.

Finance costs declined by PHP1.1 billion or 12.9% to PHP7.1 billion mainly attributable to the continuing

debt reduction efforts of the First Gen group, but this was partly offset by the incremental interest expenses recognized from the new loans obtained by the FPH Parent, EDC, Rockwell, First Balfour, and FPIP.

The aforementioned factors have resulted in a lower consolidated net income by PHP3.8 billion or 15.5%, from PHP24.6 billion in 2019 to PHP20.8 billion in 2020. Meanwhile, the net income attributable to FPH amounted to PHP9.9 billion, down by PHP2.7 billion or 21.6% compared to our attributable net income of PHP12.6 billion in 2019.

Adjusting to the Pandemic and Other Operating Highlights:

Several construction, drilling, and real estate projects of First Balfour, Thermaprime, and Rockwell, respectively, were also temporarily halted during the ECQ period which, in turn, caused delays in planned project completion and revenue take-up. Rockwell Land was greatly hit by the temporary closure of its mall and commercial establishments. First Philec’s earnings from the sale of its transformers were also affected by the mandated shutdown of its manufacturing plant during the ECQ.

Despite these setbacks, we maintained a positive outlook for the last quarter of 2020. Economic activity and the overall operations of the group eventually ramped up when the government relaxed its guidelines and policies on quarantine restrictions.

As such, during the last quarter of 2020, the operating results of some of our companies were at par or even better than their results from pre-COVID periods. The projects of First Balfour and Thermaprime, which were halted during the ECQ period, have been greenlit and are now ramping up. First Philec’s manufacturing line is also back to full plant capacity.

To secure these gains, however, we had to first secure the health, safety, and well-being of our people. Consistent with the Lopez values of social justice and employee welfare, we prioritized safeguarding the health and well-being of our employees during the COVID-19 pandemic. By taking care of our employees, we not only have a healthy and productive workforce that enables business continuity, we also contributed to overall public health and safety.

We immediately rolled out a pandemic response plan as part of our Crisis and Business Continuity Management program, which primarily addressed the risks of COVID-19 and monitored the welfare of our employees and our investments. This required all our sites to organize a focal team in charge of implementing the plan and communicating with employees and external stakeholders. As part of this plan, we also initiated a program for the screening and acquisition of COVID-19 vaccines.

Additionally, we redesigned our operations to better adapt to the pandemic situation. We categorized

our employees into those critical at the work sites, and those that can provide support from home. Workstations and common spaces in the sites were also reconfigured to meet minimum health requirements. We also implemented social customs such as sheltering-in-place, COVID-19 testing, medical disclosures, communal transport, consultation hotlines, and emotional health sessions to better support the health and well-being of our employees.

We also put in place necessary benefits and policies to help our employees adapt to the changes. We provide communication and internet allowance for employees who are working from home. As such, we also restricted business travel to limit exposure. We crafted stringent return-to-work protocols to better protect the health and safety of our employees required to work on-site. Additionally, we included COVID-19 in our health insurance coverage.

The COVID-19 pandemic also required immediate assistance to the community-at-large. We approached our pandemic-related assistance through targeted efforts such as: 1) the Pantawid ng Pag-ibig feeding program with the ABS-CBN Foundation; 2) Philippine General Hospital and University of the Philippines National Institute of Health with improved laboratory testing facilities and frontliners’ accommodations; 3) Medical City frontliners’ temporary accommodations in the Metrowalk Tent; 4) Philippine Port Authority with its 500-bed quarantine facility for overseas foreign workers at the Eva Macapagal Terminal in Manila; 5) National Kidney Technical Institute tent facilities and rental accommodations; and 6) COVID testing equipment for IloIlo City, Ormoc City and Dumaguete City. By December 2020, the combined support that the FPH Group had given for pandemic- related efforts amounted to PHP1.1 billion.

Through this strategic and collective effort to respond to the COVID-19 pandemic, we were able to secure business continuity while ensuring the health and safety of our employees. We performed as well as we could, given the circumstances. There is, however, always room for adjustments and improvements. As we say here at FPH: we have to learn how to dance with the virus.


In 2020, our businesses continued to deliver their much-needed products and services, especially in the energy and power generation sector.

To ensure business continuity, FPH Parent drew on a PHP10-billion term loan facility to enhance our cash reserves, implemented work-from-home and shelter- in-place protocols across the group wherever possible, and digitized and automated work processes in human resources, accounting, and finance.

First Gen continued to make significant strides with its liquefied natural gas (LNG) developments. For one, it secured a Permit to Construct, Expand, Rehabilitate, and Modify (PCERM) from the Department of Energy (DOE) for its Interim Offshore LNG Terminal. It also signed an agreement with Tokyo Gas to proceed with partnership to develop the temporary offshore LNG import terminal in Batangas City. Additionally, global investment giant KKR conducted a voluntary tender offer for First Gen’s shares at a 25% premium at the height of the quarantine period. KKR successfully tendered and acquired approximately 12.5% of First Gen’s outstanding common shares.

The Department of Energy’s (DOE’s) coal moratorium is a much welcome announcement that shows how the Philippine Government is taking decisive steps toward a clean and renewable energy

transition. Effective October 27, 2020, the DOE ceased processing applications for greenfield coal-fired power generation facility projects. This means that there will be more room for clean and renewable sources in the future energy mix of the country.

Rockwell Land was able to complete three projects, namely, the Lorraine Tower at The Proscenium, Edades Suites in Rockwell Makati, and Stonewell Acacia in Batangas. It also established its presence in the north with a joint venture of a prime property in Angeles, Pampanga, intended for a mixed-use residential project and the likely site for the second Power Plant Mall. FPIP, on the other hand, was able to complete around 30,000 square meters of ready-built factories (RBF), three-fourths of which has already been fully leased.

First Philec maintains its position as the leading transformers manufacturer in the country as it cornered nearly 60% of the Philippine market.

Despite halting operations during the ECQ, First Balfour picked up the pace with its outstanding construction projects. The Cebu–Cordova Link Expressway (CCLEX) project is already 60% complete, with target completion in April 2022. Meanwhile, the Novaliches-Balara Aqueduct 4 (NBAQ4) project is 70% complete, with target completion in June 2022.


As we navigate 2021 and beyond, FPH and its subsidiaries will continue to not just be a regenerative force in the business landscape, but also a force for good to its different stakeholders. Guided by our mission, purpose, and chosen path, we will continue to develop an ecosystem of businesses that help build the nation and secure a regenerative future for all.

To quote Jane Goodall, the 87-year old English-born renowned primatologist: “Climate change is actually a far more frightening thing right now than this pandemic because this pandemic will go away. But if we don’t address climate change with as much vigor as people are addressing this pandemic then the globe will heat up and we will reach a time when basically everywhere is not habitable to humans.” Jane continues by saying: “We are vulnerable and we really need to learn to understand that we are part of the natural world and not separate from it. We rely on it for clean air, clean water; we rely on forests to regulate temperature and to regulate rainfall. So we just got to start thinking differently and maybe this pandemic will start a movement.” Jane dedicated most of her life studying about the personalities and survival skills of the wild chimpanzees of Tanzania since she was 26 years old. I distinctly remember watching documentary films and studying about her passionate work in science class when I was a young student in elementary school. For me, it was more like a life adventure. I was surprised and impressed to find out that Jane is still active today in her late ‘80s.

The reason why we have re-crafted our mission and our purpose is clearly to help address this existential threat of climate change and that we, as Jane Goodall emphasized, truly need to appreciate that we are part of the natural world and not separate from it. Together with you, our stakeholders, we intend to execute our plans and give everyone the opportunity to make the right choice towards creating a brighter future together.

In line with this, I would like to express a heartfelt thank you to all our employees, shareholders, partners, and host communities who continue to support us in our challenging and exciting mission ahead. We wouldn’t have survived 2020 without you. In the meantime, we are awaiting the arrival of the vaccines and participated in the private sector group bulk order from AstraZeneca and Moderna. Surely, we have all experienced personal suffering this last year. It is crucially important for us to reflect and learn from the personal, societal, and economic challenges we faced in this pandemic to come up with a renewed, positive outlook towards a decarbonized and a regenerative future.

We remain steadfast in our commitments to all of you, our dear stakeholders. During uncertain times, one thing remains certain: We will always be powered by good.

Thank you for your continued support!


Francis Giles B. Puno                    

President and COO 

Message from the Chairman

“Every single industry today will be affected by the need to reduce carbon emissions.”

Federico R. Lopez , Chairman and CEO

Read the full text here