Meralco turns around, ends 2003 with P907-M net profit

Manila Electric Co. (Meralco), the biggest power distributor in the country, returned to profitability in 2003 after posting a huge loss a year earlier, the company said in a report to securities regulators yesterday.

Boosted by improved revenues after the grant of a 8.76-centavo per kilowatthour (kwh) rate hike by the Energy Regulatory Commission (ERC) in May last year, Meralco swung to profit in the second half, reaching P907 million by the end of the year.

In contrast, the Lopez-controlled power utility incurred a P2-billion loss in 2002, as higher debt servicing due to a weak peso and lower sales in the last quarter wiped out the company’s earnings during the early part of the year.

Although still limping from a P30-billion refund ordered by the Supreme Court in 2002 and another court-halted rate increase, Meralco’s consolidated revenues reached P135.03 billion, up by 12.5 percent from the year-ago level of P120.04 billion. The increase was driven primarily by a 4.4-percent increase in sales volume to 23,834.47 kwh from 22,822.33 kwh in 2002, which was also attributed to the hike in purchased power costs.

Meralco’s commercial customers registered the highest growth rate at 5.2 percent, followed by residential customers and industrial customers. The growth in sales to commercial customers was led by the transportation, storage and communications sector.

A total of 127,114 new customers were added to Meralco’s customer base as of the end-December 2003, 92 percent of which were residential customers. This brought the total number of customers to 4.05 million, an increase of 3.2 percent from the Dec. 2002 count of 3.92 million.

Meralco supplies electricity to the entire Metro Manila area and adjoining provinces in Southern and Central Luzon.

Operating expenses, on the other hand, rose nine percent to P129.04 billion from P118.55 billion, largely a result of the increase in the company’s purchased power costs. Recoverable purchased power cost for 2003 was pegged at P110.08 billion, or 11.86 percent higher than the previous year’s level of P98.63 billion.

Meralco said the increase in purchased power cost was due to a 4.3-percent increase in volume purchased, as well as a 6.9-percent increase in average cost per kwh.

Operating income surged 247 percent from P1.605 billion in 2002 to P5.57 billion in 2003. Other income amounted to P4.18 billion, or a decline of 43.5 percent.