DMCI Holdings books 22% income drop in H1

MANILA, Philippines — Consunji-led DMCI Holdings Inc. reported a 22 percent drop in its consolidated income in the first half of the year to P6.7 billion due to the weak contribution of its key business segments.

The company attributed the decline to the poor performance of Semirara Mining and Power Corp. (SMPC), D.M. Consunji Inc. (DMCI) and DMCI Mining.

“We had a tough first half because of lower average selling price of coal, higher replacement power costs, provisions for project cost overruns and lower average price for our lower grade nickel,” DMCI Holdings chairman and president Isidro Consunji said.

“But we hope to curb the profit decline in the succeeding quarters,” he said.

In the second quarter alone, DMCI Holdings earned P3.8 billion, down 20 percent year-on-year.

The company reported that net income contribution from SMPC dropped 26 percent to P3.4 billion from P4.6 billion. This was driven by a 213 percent surge in replacement power costs from P742 million to P2.3 billion, as well as lower average selling price of coal, which contracted 18 percent from P2,710/metric ton (MT) to P2,227/MT.

“Excluding the share in one-time loss of P334 million for the accelerated depreciation of Calaca Units 1 and 2 in 2018 and the net effect of the share in non-recurring items in 2019, namely, the accelerated depreciation of Calaca Units 1 and 2 (P187 million); one time-loss on a financial contract of Southwest Luzon Power Generation Corp. (P156 million); and one-time income of P102 million for the Commission on Audit-approved money claim of Sem-Calaca Power Corp. against the Power Sector Assets and Liabilities Management Corp., core net income contributions from SMPC fell 26 percent from P4.9 billion to P3.6 billion,” DMCI Holdings said.

Similarly, income share from the company’s construction arm DMCI declined 35 percent from P676 million to P440 million due to provisions for cost overruns.

In addition, attributable net income from DMCI Mining slipped 22 percent from P221 million to P173 million as the company shipped more lower-grade nickel at lower average selling price.

The company’s property arm, DMCI Homes, recorded a 36 percent drop in net earnings contribution from P1.8 billion to P1.2 billion due mainly to the absence of one-time gain from the sale of land in 2018. 

“Excluding a one-time gain of P715 million on sale of land, core net income contributions from DMCI Homes improved five percent year-on-year from P1.1 billion to P1.2 billion because of lower project development cost,” it added.

In contrast, off-grid energy supplier DMCI Power saw an improvement in its income contribution at P233 million, a nine percent rise from P214 million last year.

“Higher energy sales to power cooperatives in Masbate, Palawan and Oriental Mindoro accounted for the growth,” the company said.