Geothermal giant Energy Development Corp. (EDC) said on Tuesday its net income slid by 85 percent to P1.3 billion last year from P8.6 billion in 2007.

In a statement, EDC noted that revenues increased to P19.1 billion in 2008 from P18.8 billion in 2007.

EDC said their net income was adversely affected by P8.9 billion in losses from the revaluation of its foreign currency denominated loans. The losses were partially mitigated by the P2 billion in one-time income from the arbitration award granted on a long-standing contract implementation issues with the National Power Corp. The company said its recurring net income amounted to P5.5 billion last year.

Paul Aquino, EDC president and chief executive, said “the large fluctuations in our reported net income results from having to mark-to-market EDC’s liabilities during a very volatile Japanese yen situation.”

In a series of disclosures to the Philippine Stock Exchange, Aquino said EDC reported continuing efforts to hedge the company’s currency exposure on foreign loans as in the case of the ¥12 billion maturing in June 2009. Aquino noted that they based the dividend declaration to recurring net income of P5.5 billion. Recurring net income refers to the reported net income net of any unrealized foreign exchange loss or gain.

As this developed, EDC rose to the highest in more than five months in yesterday’s trading after the largest Philippine geothermal energy producer had its share price target raised 34 percent at Macquarie Group Ltd.

The company advanced 4 percent to P3.90, its highest since October 6. EDC’s 12-month share price target was raised to P5.10 from P3.82 on expectations that a weaker yen will help boost earnings, Macquarie said in a report. The stock kept its “outperform” rating, Macquarie analyst Alex Pomento said.