Lopez Holdings profit plunges 93% to P815 million

MANILA, Philippines - Lopez Holdings Corp. reported a 93-percent decrease in its first half net profit due to the absence of extraordinary gains from the sale of shares in power retailing giant Manila Electric Co., as well as lower earnings of associates.

In a financial report submitted to securities regulators, Lopez Holdings said net income fell to P815 million from P11.376 billion a year earlier, which then included gains from First Philippine Holdings Corp.’s divestment of a 6.7-percent stake in Meralco in March 2010.

The holding firm booked P127-million equity in the net loss of associates. FPHC incurred a net loss of P284 million, a reversal of the P24.9-billion profit recorded in 2010, largely due to Energy Development Corp.’s P5-billion impairment charge for its Northern Negros geothermal power plant.

EDC made a final provision for impairment, resulting from decommissioning the 49-megawatt power plant. The writedown led to EDC’s loss contribution to First Gen Corp., which in turn is a unit of FPHC.

Lopez Holdings president Salvador G. Tirona said the impairment charge taken by EDC is a “non-cash” transaction and would not affect the company’s ability to declare dividends.

FPHC registered revenues of P323 million, down 88 percent from P2.63 billion.

Multimedia conglomerate ABS-CBN Corp. likewise saw its profit sliding 26 percent in the first half to P1.68 billion, inclusive of a P674-million gain on sale of SkyCable Philippine Depositary Receipts. Consolidated revenues dipped 18 percent year-on-year to P13.884 billion from P16.839 billion, due to the lack of election-related advertising.

As of end-Lopez Holdings held a 57.3- percent economic interest in ABS-CBN and 44.3 percent in FPHC.

As a holding company, Lopez Holdings receives revenues from asset sales and dividends from investees. Hence, the key performance indicator with the most direct impact on Lopez Holdings is the net income of investees.

Any dividend received by Lopez Holdings is based on the investees’ net income in the previous year.

For the period in review, the financial performance of investees was within expectations. ABS-CBN and First Holdings declared cash dividends totaling P1.193 billion in the first half of 2011.