Meralco profit up 7% to P5.7 B in Q1

MANILA, Philippines — Manila Electric Co. (Meralco) delivered mild growth sales and profit during the first quarter despite coming from a high base last year.

In a briefing yesterday, Meralco chief finance officer Betty Siy-Yap reported net income grew seven percent to P5.7 billion, while core net income rose 14 percent to P5.6 billion.

She said core profit was largely driven by higher distribution revenues on the back of the two-percent growth in energy sales volume, positive contribution of 65 percent owned subsidiary Clark Electric Distribution Corp., and the turnaround of the company’s retail electricity supply (RES) units’ operations.

Meanwhile, revenues went up six percent to P75.4 billion, wherein bulk or 98 percent came from electric revenues, which grew seven percent.

“A major driver of which is the higher pass through charges which grew eight percent to P59.4 billion resulting from the combined effects of the higher cost of coal and gas, the further weakening of peso and higher prices in the wholesale electricity spot market (WESM) which is largely driven by the power supply shortage,” Siy-Yap said.

In terms of energy sales, Meralco said sales volume increased modestly at two percent to 10,381 GWh.

The average temperature during the first quarter was 26.8 degrees celsius, cooler than the average maximum temperature of 33.3 degrees celsius in the same period last year.

“The lower than expected sales growth during the first quarter of 2019, particularly in the residential and commercial sectors, were attributable to concerns on higher interest rates, the weakening of the Philippine peso vis-a-vis the US dollar rate, and their impact on fuel and commodity prices, exacerbated by the recent red and yellow alerts caused by the coincident forced outages of several plants,” Meralco chairman Manuel V. Pangilinan said.

While lower-than-expected, the first quarter sales volume results still showed a “mild growth” against a very high base last year.

“You may recall that the first quarter of 2018 showed an 8.9-percent growth over 2017. However, notwithstanding that, we are pleased to share that our operations, operating results continue to be excellent in terms of operating matrix,” Meralco president Oscar Reyes said.

“We were fortunate to register favorable financial results even as we maintained strong balance sheet and financial condition and liquidity,” he said.

Customer count also continued to grow at a healthy rate of 4.5 percent to 6.7 million customer accounts, with the highest contribution coming from the residential segment which increased five percent.

The first half of the year looks good as the second quarter  started on a strong note, Pangilinan said, but gi.

He, however, couldn’t give a a full-year guidance as the fifth regulatory period (RP) of the power distributor has yet to be finalized.

Officials expressed uncertainty in sales and profit trend in the second half of the year due to the pending resolution of tariff for the fifth regulatory period starting July 1.

Power distribution utilities are regulated by the Energy Regulatory Commission within “reset period” of four regulatory years, with each year starting July 1 and ending June 30 of the following year.

Meralco’s fourth RP started on July 1, 2015 and closes on June 30.