TransAlta Renewables Net Earnings Slip in Q1

Canada-based independent power producer (IPP) TransAlta Renewables has reported a sharp decline of CAD 73 million in its net earnings attributable to common shareholders to merely CAD 3 million, during the first quarter of 2020.

The company’s net earnings attributable to common shareholders stood at CAD 76 million in the same period last year.

Further, the reason behind such a steep fall in the company’s net earnings was attributed to – reduction in finance income of CAD 18 million primarily related to higher returns of capital on the US Wind and Solar tracking preferred shares and a reduction of dividends on the Preferred Shares Tracking Australia Cash Flows; higher foreign exchange losses of CAD 13 million due to the weakening of the Australian dollar.

Besides, the few other reasons for lower net earnings of the company include – unfavourable changes in the fair value of the Preferred Shares Tracking the Amortizing Term Loan of CAD 36 million; lower operating income of CAD 10 million due mainly to lower revenues in Canadian Wind; and an increase in depreciation expense of CAD 3 million.

Commenting on the performance, John Kousinioris, President of TransAlta Renewables, said “with respect to growth, we continue to advance conversations with TransAlta Corporation regarding the drop-down of renewable and gas assets into the Company. Finally, I want to thank all TransAlta employees and contractors, especially the front-line employees of TransAlta that operate and maintain the TransAlta Renewables facilities in Canada, the United States and Australia.”

However, it’s adjusted funds from operations (AFFO) remained flat at CAD 94 million during the first quarter of 2020. Whereas cash available for distribution (CAFD) in Q1 stood at CAD 91 million, drop from CAD 92 million in the same period last year.

Both, AFFO and CAFD were impacted by higher tax equity distributions and realized foreign exchange losses which were offset by higher comparable EBITDA, lower sustaining capital expenditures on owned assets, and lower current income tax expense. Moreover, CAFD was also impacted by higher principal repayments on the amortizing debt.

Meanwhile, comparable EBITDA of the company grew by just CAD 2 million driven by higher production at Wyoming and Lakeswind and the positive impact of capacity additions in the US Wind and Solar were partially offset by the lower winds in Eastern Canada, lower carbon offset revenues and lower government incentives in Canada.