PCEV reports lower net income of P213M in first quarter

MANILA, Philippines - PLDT Communications and Energy Ventures (PCEV), formerly Pilipino Telephone Corp. (Piltel), posted a 115-percent drop in its net income from P458 million in the first quarter of last year to P213 million in the same period this year.

Core net income, which excludes one-time, exceptional charges, stood at a higher P525 million for the first quarter of 2011 from P475 million in 2010.

PCEV’s income is derived mainly from its direct equity share in the net income of Manila Electric Co. (Meralco) and its holdings in Beacon Electric Asset Holdings Inc. PCEV owns 50 percent of Beacon, a special purpose company jointly owned by PCEV and Metro Pacific Investments Corp. (MPIC) whose sole purpose is to hold shares in Meralco, which presently amount to 392.5 million shares, or 34.8 percent of Meralco’s outstanding common shares.

PCEV is 99.5 percent owned by Smart Communications Inc.

PCEV’s direct holdings in Meralco consist of 68.8 million Meralco common shares (6.1-percent interest), retained by PCEV after the transfer of its 154.2 million shares to Beacon Electric in March 2010. PCEV acquired its original 20-percent investment in Meralco in July 2009.

Meralco recorded a six percent increase in its reported net income at P2.1 billion, in the first quarter, due to the effect of the delayed implementation of rate adjustments for the third and fourth regulatory years of the second regulatory period as well as lower costs and expenses.

The adjustment in the distribution rate for the third regulatory year took effect in April 2010 after a voluntary suspension implemented in January 2010 while the adjustment for the fourth regulatory year took effect January 2011.

The power company’s core net income for the first quarter of 2011 amounted to P3.3 billion, an improvement over the P2 billion recorded in the same period last year.

Core earnings before interests, taxes, depreciation and amortization (EBITDA) amounted to P6.6 billion, representing a core EBITDA margin on gross revenues of 12 percent.

Consolidated revenues, of which electricity accounts for 98 percent of the total, decreased six percent due largely to lower average pass-through costs and slightly lower energy sales, partly offset by the increase in customer count.

Officials noted that notwithstanding the slightly lower energy sales in the first quarter of 2011, Meralco still managed to grow customers by three percent, largely from the commercial and residential sectors. Total consolidated revenues from electricity sales for the three months ended March 31, 2011 amounted to P56.2 billion, or six percent lower than the amount for the same period in 2010.

The equivalent energy sold for the first quarter of 2011 was 6,991 gigawatt-hours, compared with 6,996 gwh registered for the comparative period in 2010. Sales to the industrial sector declined as a result of the slowdown in merchandise exports, the main driver of energy sales in 2010. On the other hand, sales volumes to commercial customers grew one percent for the quarter while the increase in the number of residential customers offset the decline in their per capita kilowatt-hour consumption, resulting in stable sales to residential customers year-on-year.

The 2011 first quarter operating results also reflect the slightly lower pass-on system loss charge from 54 centavo per kwh in 2010 to 51 centavos per kwh in 2011, reflecting an improvement from seven percent to only six percent of total charges per kwh.