Meralco earnings down 3% in H1

MANILA, Philippines - Power distribution giant Manila Electric Co. (Meralco) posted lower earnings in the first half amid lower non-electric contributions from subsidiaries, pushing management to defer issuing its profit guidance this year.

In a briefing yesterday, Meralco chief finance officer Betty Siy-Yap said the company’s core net income declined three percent from P10.4 billion in the first six months of 2016 to P10.1 billion this year.

Reported net earnings amounted to P10.5 billion, also three percent lower than last year’s P10.77 billion.

“In terms of our subsidiaries, they’re actually lower because of delayed award of some projects and we had significant completion of subsidiary projects, largely construction from last year. The other one, with respect to retail electricity income, which in previous years, well… competition has become more intense and prices have actually gone down,” Siy-Yap said.

Subsidiaries Meralco Energy Inc. and Meralco Industrial Engineering Services Corp. (encountered delays in the award of projects and slow validation of work accomplishments as project owners held back on proceeding with certain scheduled projects.

Meanwhile, retail electricity supply (RES) units MPower and Vantage Energy Solutions and Management Inc. contributed less as a result of the temporary disruption in commercial operations of suppliers and intensified competition in the RES market.

For the period, Meralco managed to register a 3.1-percent growth in energy sales despite the high base, company president Oscar Reyes said.

“In 2016, first half sales surged by 11 percent, so that constitutes already a high base. But we were still able to see an increase of 3.1 percent increase in sales,” he said, noting that their customer base continued to increase at a healthy pace to 6.117 million customers.

“Sales could have been bigger but wasn’t, because of the slightly cooler temperature. 2016 was very warm, accounting for a surge in sales compared to 2015,” he added.

Meralco chairman Manuel Pangilinan said electricity sales in the first semester are driven by the sustained growth and sound fundamentals of the economy, healthy domestic and foreign investor confidence and strong consumer demand.

“These have enabled us to register good financial results at a level broadly similar to the previous year, and to maintain a strong balance sheet and liquidity position, critical to supporting heavy capital expenditures for our distribution business and investments for our planned power generation portfolio,” he said.

However, the management has decided to issue a profit guidance once the third quarter is finished.

“Numbers could change as a consequence of those investments if things were to pan out in one or two projects we mentioned… it’s best perhaps in the third quarter, when we announce third quarter results. That’s closer to the full year, then we are in a better position how the full year would look like,” Pangilinan said.