Meralco looks to surpass core profit target

MANILA, Philippines — Power distributor Manila Electric Co. (Meralco) is looking to slightly surpass its core profit last year as the surprise surge in sales will be tempered by the intense retail competition and ongoing developments in its power generation business.

Meralco chairman Manuel V. Pangilinan said the company has set a guidance on 2017 consolidated core net income to be a slight improvement over the amount reported in 2016, with only two month left this year.

The firm has projected only a slight improvement since management is “unable to pin the exact number but it will not be far from that,” Meralco president Oscar Reyes said in a briefing yesterday.

“The reason for that is, number one, some business verticals such as retail electricity have increasingly been very very competitive. Secondly, we’re in business development mode particularly in power generation and that’s reflecting in our results, because development expenses are charged as expenses during the year incurred,” he said.

Meralco booked a core net income of P19.58 billion and a reported net income of P19.18 billion in 2016.

As of end-September, Meralco has registered a core net income of P15.4 billion, up three percent from last year’s P15 billion, Meralco chief finance officer Betty Siy-Yap said.

Reported net earnings amounted to P15.9 billion, two percent higher than last year’s P15.7 billion.

The growth was hinged on an improvement in sales volume despite coming from a high base, which grew 4.3 percent to 31,401 gigawatt-hours (gwh), and on the  4.6 percent increase in customer base to 6.25 million accounts, Reyes said.

Subsidiaries such as CIS Bayad Center Inc., Radius Telecoms Inc. and Clark Electric Distribution Corp. (CEDC), added over P570 million to the core net income.

Bayad Center is the over-the-counter bills collection-payment center of Meralco while Radius provides back-up telecommunications services to other carriers and businesses with private leased line circuit solutions.

CEDC is the power distribution arm of Clark Development Corp. (CDC), the state agency managing the Clark Special Economic Zone.

“Meralco’s four percent growth in energy sales volumes, five percent expansion in customer base and three percent increase in consolidated core net income for the first nine months of 2017 are significant achievements, considering the high base in 2016,” Pangilinan said.

“Regulatory, policy and judicial challenges relating to retail competition and open access (RCOA) temporarily weighed down on the performance of MPower, Meralco’s retail electricity supply (RES) unit. We are now on the back to serving the growing number of contestable customers with our highly competitive product, service and price offerings,” he said.