Energy Solutions
First Philec, Inc. (FPI) is the pioneer and leader in electrical transformer solutions in the country. With over 50 years of experience, FPI has been a trusted name in distribution transformers. FPI is the preferred provider of local power distribution utilities and electrical cooperatives, supplying nearly 60 percent of the nation’s distribution transformer needs.
FPI’s revenues increased by 73.1 percent, from PHP2.6 billion in 2021 to PHP4.5 billion in 2022. This increase was mainly driven by higher demand from Meralco, electric cooperatives, and private distribution utilities.
FPI registered a net income of PHP1.0 billion in 2022. The 109.5 percent increase from PHP496.1 million in 2022 was mainly due to higher demand from Meralco in terms of volume on core business and increased demand from electric cooperatives and private distribution utilities. A well-managed supply chain ensured product availability and enabled the company to maintain a strong financial position.
Key Highlights
Along with the robust revenue, FPI orders also saw significant growth. Meralco remains the main contributor to the volume, complemented by electric cooperatives and private distribution utilities that boosted the PHP4.5 billion revenue, registering a growth of 48.0 percent and 17.0 percent, respectively.
FPI’s manufacturing capacity grew in 2022, reaching an average of 2,500 units per month. This growth can be attributed to the equipment upgrades and additional manpower on the production floor, as well as the cultural incentives that encourage teamwork on the shopfloor, including monetary incentives and career development opportunities.
FPI expanded its electric cooperatives, property, commercial, and industrial customer base with 28 new additions in 2022, contributing a total of PHP70.0 million in revenues. FPI contributes to FPH’s mission of a decarbonized and regenerative future and continues to innovate. After the launch of the 100 percent biodegradable and/or recyclable Super Green transformer, in 2021, FPI focused on preparing for the product’s commercialization in 2022. This included completing legal and regulatory activities such as trademark registration for the name and branding. Introducing the Super Green transformer to key customers such as Meralco, Aboitiz Group, and other utilities and cooperatives across the country was made a priority, with the aim of encouraging them to switch from conventional to Super Green technology. FPI is optimistic about the potential success of the Super Green transformer in the market.
In 2022, FPI began its entry into the US market. This opportunity was created by the recent global supply chain challenges faced by the Western market. FPI was able to capitalize on this by providing transformer requirements needed by US utilities. The company estimates an addressable market worth of USD 177.1 million. FPI is currently in the process of finalizing purchase orders from utilities located in Portland and Maine. Additionally, the company is actively engaging with other distribution utilities in the Pacific Northwest and East Coast to expand its presence in the US market.
Staying committed to FPH’s mission, FPI continues to advocate for not using single-use plastic in its Batangas plant. Reducing plastic waste by 80 percent versus 2021. As of 2022, 21 of 22 active foreign vendors have already started using sustainable packaging for raw material packaging. This has led to a reduction of 1.1 metric tons, or an 80 percent reduction in packaging materials used. Moreover, Meralco’s distribution transformer supplies are currently fueled by biodegradable insulating fluid.
FPI was named one of the Top 10 Transmission and Distribution Companies in APAC in the October issue of Utilities Tech Outlook magazine. It also won CWIEME Sustainability Award and was a finalist at the 2022 AIBP Awards (Category: Tech for ESG).
Looking Forward
In 2023, FPI plans to continue building on its new business initiatives. The organization aims to balance efforts between its core and new business products, with a slight prioritization on introducing non-transformer products to customers beyond the Meralco market, such as electric cooperatives and distribution utilities in Visayas. It is also looking at potential markets with similar technical alignments in Southeast Asia, to further strengthen their export business. Moreover, FPI is planning to make investments related to battery storage and is currently in active discussions with local and international companies, including experts from Japan, for this investment opportunity.
FPI will focus on building capabilities that enhance value to customers, especially in the market and plant areas, and developing a culture that can adapt to changing environments. FPI will continue to drive its digital transformation and capabilities as it moves into a new era of business.
In a volatile, uncertain, complex, and ambiguous (VUCA) world, FPI believes its products will be well-suited to meet the current and future needs of its customers, especially if they address pain points caused by extreme weather, higher penetration of renewables, a hotter Philippine climate, and the impact of electrification of transport.
As extreme weather events become more frequent and severe, it could lead to an increased need for transformer replacement or repairs due to accelerated deterioration of transformer components. This could provide FPI with a potential new revenue stream and an opportunity to innovate and develop new solutions to address these challenges.
The potential widespread adoption of electric vehicles (EV) that require fast charging systems can also accelerate the aging of transformers, reducing their lifespan. EV chargers have electronic components that can generate harmonic loads on the transformer, which can cause overheating and potentially damage the transformer. Aside from this, the increasing penetration of Distributed Energy Resources, particularly solar, can lead to higher voltage stresses on the connected equipment, such as transformers. Additionally, the reverse flow of power during the feeding-in of solar energy to the grid can cause overloads to the transformer if not properly monitored and mitigated. These developments pose an opportunity for FPI to improve the technology and performance of its products to be better prepared for these changes in the market.
