Semirara Mining and Power Corporation (PSE: SCC) has long been viewed primarily as a coal company. It operates the country’s largest coal mine and supplies fuel to power plants, industrial companies and customers across Asia. Its ownership of power plants in Calaca has traditionally provided another source of earnings, but coal has remained central to the investment story.
In 2025, Semirara’s consolidated revenue fell 20 percent to ₱52.23 billion, while net income dropped to ₱13.06 billion from ₱19.63 billion a year earlier. The decline came largely from weaker coal prices and lower shipments, although record electricity sales helped cushion the impact. Power already accounted for 54 percent of group net income during the year, while coal, including the cement associate, contributed 46 percent.
By the first half of 2026, the shift became even more apparent. Consolidated revenue increased 9 percent to ₱34.02 billion, while reported net income edged 2 percent higher to ₱8.58 billion. Yet behind those numbers, the two main businesses moved in very different directions. Power accounted for around 70 percent of group earnings during the first half, while coal contributed the remaining 30 percent. This divergence became more obvious during the second quarter.
Higher coal prices did not translate into higher coal profits
At first look, Semirara’s coal business appeared to improve. Its average coal selling price increased 27 percent to ₱2,833 per metric ton during the second quarter, supported by stronger global coal benchmarks and a better sales mix. Coal revenue consequently increased 9 percent to ₱11.18 billion.
But higher prices were not enough to offset rising production costs. Standalone coal net income fell 65 percent to just ₱782 million from ₱2.25 billion a year earlier. After intercompany eliminations, the coal segment contributed only ₱191 million to consolidated earnings, a decline of about 90 percent.
Quarterly coal production dropped 55 percent to 2.5 million metric tons from 5.6 million metric tons. Production from the mature Narra mine declined to 0.8 million metric tons, while the newer Acacia mine contributed 1.7 million metric tons. Water seepage restricted activity in parts of Acacia, which limited access to some of the better-quality coal that the company expected to produce.
At the same time, the strip ratio almost doubled to 19.7 from 10.4. A higher strip ratio means that the company must remove more soil and rock for every unit of coal it extracts, which raises mining costs.
The impact showed up clearly in the income statement. The cash component of production costs jumped 46 percent to ₱7.64 billion. Total cash costs rose 36 percent to ₱8.85 billion, much faster than the increase in revenue. Core EBITDA margin fell to 21 percent from 36 percent, while net income margin dropped to just 7 percent from 22 percent.
There was another cost factor. Coal shipments reached 4.0 million metric tons during the quarter even though production was only 2.5 million metric tons. This meant Semirara had to draw from previously accumulated inventories, which caused capitalized production costs from those inventories to flow through cost of sales.
Coal prices, therefore, may have recovered, but mining economics became much more difficult.
Power moved in the opposite direction
While coal margins contracted, Semirara’s power business recorded its strongest quarter yet.
Standalone power revenue jumped 40 percent to ₱9.05 billion. Core EBITDA increased 65 percent to ₱5.15 billion, while standalone net income more than doubled to ₱3.91 billion from ₱1.94 billion. Core EBITDA margin expanded to 57 percent from 48 percent.
The improvement came from both operating performance and electricity prices.
Overall plant availability rose to 94 percent from 87 percent, while outage days fell to 21 from 48. Gross generation increased 9 percent to a record 1,710 gigawatt hours. Electricity sales also rose 9 percent to 1,563 gigawatt hours. Those additional megawatts also reached the market at an opportune time.
Average Luzon-Visayas spot electricity prices climbed 72 percent during the second quarter to ₱6.97 per kilowatt hour from ₱4.04 a year earlier. Prices reached ₱8.54 per kilowatt hour in June.
Semirara has also increased the amount of generation covered by bilateral contracts without eliminating its exposure to higher spot prices.
Contracted capacity reached 445.4 megawatts as of June, equivalent to 57 percent of its net selling capacity of 785.2 megawatts. After station service requirements, the company still had about 339.8 megawatts of net spot-market exposure.
This provides an interesting earnings structure. Bilateral contracts can offer greater revenue visibility, while uncontracted generation can benefit when WESM prices rise.
The power segment’s second-quarter strength was significant enough that it accounted for approximately 96 percent of Semirara’s reported group net income, compared with 57 percent during the same quarter last year. Coal, including the cement associate, contributed only 4 percent.
There is an important qualification. Power earnings benefited from a ₱180 million nonrecurring gain related to the reassessment of the remaining useful lives of certain SLPGC power plant assets. The longer estimated useful lives reduced depreciation expense. Excluding the nonrecurring gain, consolidated first-half core net income was essentially unchanged at ₱8.40 billion versus ₱8.42 billion last year.
Still, the accounting adjustment does not explain the entire improvement. Higher generation, better plant availability and stronger electricity prices produced a substantial underlying increase in power profitability.
The coal contract adds another layer of uncertainty
The shift toward power becomes more important because Semirara also faces a major question over the future of its mining operations.
Coal Operating Contract No. 5, which gives Semirara the right to conduct coal mining operations on Semirara Island, expires on July 14, 2027. The Department of Energy has placed the relevant coal blocks under a competitive bidding process. As of the second-quarter filing, the deadline for submission and opening of bids had been deferred, with a revised timetable yet to be announced.
The uncertainty became significant enough to appear among the key audit matters in the 2025 audited financial statements.
The approaching expiry of the contract and the bidding process were treated as impairment indicators for assets related to coal operations. These included about ₱13.49 billion of inventories and ₱8.25 billion of property, plant and equipment attributable to the coal business at the end of 2025. Management conducted impairment tests, but no impairment loss was recognized because the estimated recoverable amount remained above carrying value.
Perhaps more interesting is what management said about a scenario in which the mining business changes.
The annual report noted that the company’s power subsidiaries have operational maturity, remaining plant lives and an economic base that is independent of the remaining term of the coal operating contract. Management also said the parent company could potentially continue as a coal supplier, intermediary or importer to support the fuel requirements of the affiliated power plants.
This disclosure suggests that Semirara itself already considers its power assets an important source of economic continuity beyond the current coal contract.
Cash is rising while coal investment falls
The balance sheet also shows how management has positioned the company ahead of this uncertainty.
Cash and cash equivalents climbed to ₱18.34 billion at the end of June from ₱4.36 billion at the end of 2025. Part of that increase came from ₱10.80 billion of operating cash flow, but Semirara also obtained a new ₱5 billion loan during the first half.
At the same time, capital spending has dropped sharply. Group capital expenditures declined 80 percent to only ₱0.9 billion during the first half from ₱4.5 billion a year earlier. Semirara expects full-year 2026 capex of about ₱1.9 billion, down from ₱5.9 billion in 2025. Coal capex alone is expected to fall to ₱0.8 billion from ₱4.8 billion. Management explicitly said that certain coal investments have been deferred pending the outcome of the bidding for the coal operating contract.
The result is a company with more financial flexibility at a time when one of its core businesses faces considerable regulatory uncertainty.
Semirara is not yet a company that can be evaluated without reference to coal. Coal remains an important source of revenue, cash flow and value, while stronger coal prices could still provide substantial earnings upside if production costs normalize.
But the financial statements increasingly show that the company is no longer dependent on coal profits to the same degree it once was.
In 2025, power accounted for slightly more than half of earnings. By the first half of 2026, it accounted for roughly 70 percent. In the second quarter alone, its share rose to 96 percent.
Whether that level can be sustained is another matter. Electricity spot prices can decline, additional renewable and battery capacity may eventually pressure daytime WESM prices, and plant outages can quickly change power economics. Management itself expects around 4,000 megawatts of new renewable generation and battery storage capacity in 2026 and another 5,000 megawatts in 2027.
Still, Semirara’s latest results reveal an important change in its earnings structure.
For years, investors could largely view the company as a coal producer with power assets attached. The latest numbers raise a different possibility: Semirara may gradually become a power company whose coal business provides an increasingly smaller share of its profits.
Can Semirara Maintain Its Dividend?
For shareholders, the more immediate question is whether the decline in coal profitability will eventually translate into lower dividends.
In 2025, Semirara declared total dividends of about ₱13.81 billion, equivalent to roughly ₱3.25 per share. This was already lower than the approximately ₱25.50 billion distributed in 2024, but it still represented a substantial payout relative to earnings. The 2025 dividend was equivalent to about 70 percent of the previous year’s ₱19.63 billion net income and remained far above the company’s minimum dividend payout policy of 20 percent.
The latest results suggest that maintaining a dividend close to ₱3.25 per share may still be possible even if coal profits remain under pressure. Semirara earned ₱8.58 billion during the first half of 2026, slightly above ₱8.42 billion a year earlier, as stronger power earnings offset the decline in coal. Power accounted for about 70 percent of first-half earnings and as much as 96 percent of reported group net income during the second quarter.
Cash generation also remains strong. Semirara generated ₱10.80 billion in operating cash flow during the first six months of 2026. Capital expenditures amounted to only ₱880 million, which left almost ₱10 billion of cash from operations after capital spending before financing activities. No dividend was paid during the first half, compared with more than ₱8.35 billion during the same period in 2025.
The sharp decline in capital spending could provide additional support for dividends. Semirara expects full-year 2026 capital expenditures of only ₱1.9 billion, down from about ₱5.9 billion in 2025. Coal capex alone is projected to fall to ₱0.8 billion from ₱4.8 billion as management defers some investments while it waits for the outcome of the Coal Operating Contract bidding process.
The company also ended June with ₱18.34 billion in cash and cash equivalents, although this figure should be viewed with some caution because Semirara obtained a new ₱5 billion loan in March. Interest-bearing loans consequently increased to ₱5.53 billion from only ₱997 million at the end of 2025. Even after the increase, however, interest-bearing debt remained modest relative to ₱64.36 billion of equity.
This means Semirara still has considerable financial flexibility, but the sustainability of its dividend will increasingly depend on the power business rather than coal alone. If power can continue to generate strong earnings and cash flow while capital spending remains low, a dividend near the 2025 level may remain achievable even with weaker coal margins.
Returning to the extraordinary dividend levels seen during the energy boom would be more difficult. A ₱6-per-share dividend, similar to the amount distributed in 2024, would require about ₱25.5 billion based on roughly 4.25 billion outstanding shares. That would exceed the current annualized earnings run rate and would require either a substantial recovery in coal profitability, further growth in power earnings or a deliberate distribution of accumulated cash and retained earnings.
For this reason, the more relevant issue is no longer whether Semirara can reproduce the exceptional dividends of the coal-price boom. It is whether the increasingly profitable power business can generate enough cash to preserve a high dividend even as coal contributes less to group earnings.
