Meralco income down 22% to P3.13 billion in 2008

MANILA, Philippines - Lopez-controlled Manila Electric Co. (Meralco) reported yesterday a 22 percent drop in its net income to P3.13 billion in 2008 from P4.04 billion in 2007.

In a disclosure to the Philippine Stock Exchange, Meralco attributed the drop in earnings to lower sales. Total revenues decreased 4.44 percent from P200.69 billion in 2007 to P191.79 billion last year.

Meralco said revenues from the sale of electricity declined 4.93 percent from P196.17 billion in 2007 to P186.51 billion in 2008 primarily due to lower generation cost per kilowatthour (kwh) billed to customers.

While revenues declined, overall electricity sales grew by a modest 2.2 percent and system loss performance exceptionally improved to 9.3 percent.

Sales to commercial customers grew by 4.6 percent, followed by industrial customers at 2.1 percent. Sales to residential customers declined by 0.4 percent.

Meralco president Jose de Jesus said they expect flat revenue growth this year.

“We see flat growth in sales for 2009.  But it still depends. There are some developments in the market because of the impact of the global financial crisis,” Meralco head of utility economics Ivanna dela Pena said.

Meralco’s total expenses, however, decreased 4.12 percent from P194.6 billion in 2007 to P186.59 billion in 2008, mainly due to lower purchased power costs which declined 9.24 percent from P172.84 billion in 2007 to P156.87 billion.

The decline is a result of lower generation costs partly due to the utilization of banked gas.

The company recognized a provision for probable losses and refund of P6.62 billion. Of this amount, P2.52 billion is for disallowed recovery of generation costs while P4.07 billion is for transmission charges refundable to customers.

Without the provision for probable loss on the disallowed recovery of generation costs of P2.52 billion, net income would have been P5.65 billion, an increase of 39 percent over 2007, the company pointed out.

Meanwhile, Meralco will start the quarterly payment of P750 million next month for a P12-billion loan secured in 2006, a ranking company official said.

Meralco treasurer Rafael Andrada said this year, the company is scheduled to pay P3 billion on principal and interest for the restructured loan.

“In 2006, that’s P12 billion with a two-year grace period -it’s about P3 billion in principal and interest. That’s payable every quarter, or P750 million. We will start March this year for the first payment,” he said.

Andrada said they could handle the debt payment despite some regulatory orders imposed on Meralco.

“We have scheduled debt payments this year which will be handled by the cash flow,” he said.

The loan was secured through a notes issue with a maturity of six years, with a one-year grace period, according to the Meralco official.

Of the P12 billion raised in December 2006, P6 billion constituted the fixed-rate tranche with an interest rate of nine percent per annum. 

The remaining P6 billion, on the other hand, represented the floating-rate tranche which was auctioned off on Dec.4, 2006.

Market drops 21 points

At the Philippine Stock Exchange (PSE), share prices fell 1.1 percent yesterday, weighed down by heavy losses on Wall Street, dealers said.

The composite index shed 21.45 points to close at 1,869.59 while the all-shares index shed 0.6 percent, or 7.49 points, to close at 1,216.28.

A total of 868.34 million shares worth P1.21 billion changed hands. Decliners led advancers 44 to 29, while 42 others closed unchanged.

“We were expecting a bigger decline given heavy losses in the US market,” Lawrence de Leon of Accord Capital Equities told Dow Jones Newswires.

“However, several blue chips are generating buying interests because of individual stories and helped the market avoid a sharp fall,” he said.

San Miguel Corp A shares rose 2.06 percent at P49.50 while its B shares rose 18.8 percent to close at P50.50 on news that Japan’s Kirin group was to buy 43.2 percent in its beer subsidiary.

Oil prices continued to slip in Asian trading hours Tuesday, pressured by demand worries even though expectations of more OPEC production cuts are limiting the falls, dealers said.

New York’s main contract, light sweet crude for April delivery, eased 32 cents to $38.12 a barrel.