MPIC net income surges more than two-fold to P1.93 billion in first half

MANILA, Philippines – Metro Pacific Investments Corp. (MPIC), the local flagship of Hong Kong-based conglomerate First Pacific Ltd. Corp., said yesterday its core earnings surged more than two-fold to P1.93 billion in the first half this year on the back of strong gains in its tollway and water distribution units as well as the first-time contribution of Manila Electric Co. (Meralco).

“With the strong results in the first half and the improving prospects of our business units, MPIC is raising its income guidance for the year by 10 percent to P3.3 billion,” said MPIC chairman Manuel V. Pangilinan in a press briefing yesterday, adding that the positive results reflect management’s commitment to growth through operating efficiencies, highly focused customer service and strict cost discipline.

Pangilinan said the board has likewise approved a one-centavo cash dividend per common share to stockholders as of Aug. 19, payable on Sept. 16, 2010.

Jose Ma. K. Lim, president and chief executive officer of MPIC, said consolidated net income, which reflects a net foreign exchange loss and non-recurring losses of P172 million, amounted to P1.75 billion as against P1.7 billion a year earlier. Revenues grew 18 percent to P8.86 billion.

MPIC’s investment in Meralco added P666 million or 24 percent of equitized core earnings. Meralco is seen to report a net income of P11 billion this year. In the first half this year, the power utility giant reported a core net income of P5.81 billion, up 82 percent.

Maynilad Water Services Inc. accounted for P1.28 billion or 46 percent of the aggregate net profit contribution to MPIC — a four-fold increase from the year ago’s contribution, on higher billed water volume. Total core net income of Maynilad stood at P2.45 billion in the first half or nearly twice the P1.31-billion recorded in the same period a year ago.

Non-revenue water (NRW) significantly declined from an average of 61 percent to 55 percent as of end-June this year while the number of serviced customers rose nine percent to 846,682. At the end of the year, Maynilad is looking to bring down its average NRW to 51 percent and 40 percent by the end of the year and 2012, respectively.

Victorico P. Vargas, the newly-appointed president and chief executive officer of Maynilad, said the water firm continues to work with the government to develop alternative sources of water, which include the Sierra Madre in Montalban, Rizal and Wawa River in Marikina.

Lim said Maynilad is working on increasing water supply from the Putatan water treatment plant to 100 million liters a day by September this year and further to 300 MLD in the short-term. The company is also studying the feasibility of eventually sourcing 900 MLD from Laguna Lake.

Tollways unit Metro Pacific Tollways Corp. chipped in P761 million or 27 percent of total profit from operations, representing a 11.9 percent growth from P680 million the previous year. MPTC reported a core net income of P753 million or an increase of 18 percent.

MPTC president Ramoncito Fernandez said the construction of Segment 9 which involves the construction of a four-lane, three-kilometer (NLEX) expressway that will connect the North Luzon Expressway to MacArthur Highway in Valenzuela City; and Segment 10, a four-lane, five-kilometer elevated road from MacArthur Highway to R-10, will start in the fourth quarter of 2010 and 2011, respectively.

Fernandez said the firm’s unsolicited proposal for the P17-billion connector road project that will connect the NLEX at C3 to Skyway 1 in Buendia, Makati has already been accepted by the government and will be subject to a Swiss challenge. He, however, is confident that MPTC will bag the project.

Lim said the construction of Segments 9, 10 and the connector road will require funding at the parent company level. Total investments needed for the three tollroad projects stand at P25 billion.

The healthcare group, comprising Makati Medical Center, Cardinal Santos Medical Center, Davao Doctors Hospital and the recently-acquired Riverside Medical Center, contributed P67 million or three percent of total. Aggregate core net income reached P181 million, down by 25 percent due reduced enrollees and revenues in the group’s nursing college subsidiaries in Davao, Makati and Bacolod.

Augusto Palisoc Jr., president and chief executive officer of MPIC Hospitals Group, said they continue to hold discussions with several groups and expect to close another deal within the year. The group aims to have a total of 15 hospitals and is open to tapping the REIT market.

The hospitals group has earmarked P4.8 billion over the next five years for the acquisition of medical equipment and improvement of infrastructure.

Maynilad, on the other hand, has allotted P35 billion over a five-year period for its capex program.

During the first half, MPIC divested its shares in Manila North Harbour Port Inc. to focus on stronger opportunities for growth as the Philippines’ premier infrastructure investment management and holding company.

The solid financial health of MPIC has resulted in the reduction in the company’s net debt to equity ratio to 0.22 times as of en- June 2010 from 0.31 times as of end-December 2009. The decrease in debt was due to a loan payment in the first quarter of 2010.