Meralco to do better this year

MANILA, Philippines — Manila Electric Co. (Meralco) is optimistic it will perform better this year after it completed the acquisition of Global Business Power Corp. (GBPC).

“We are optimistic with Meralco’s results. GBPC is part of its portfolio now. It should raise its profitability for the year, albeit it is for nine months only. We continue to be optimistic,” Meralco chairman Manuel V. Pangilinan said in a virtual briefing yesterday.

He said the residential and industrial segments of Meralco would continue to be strong revenue contributors.

“The residential segment continues to be an active contributor to revenues for a number of reasons. Internet connection has become an essential service to our households that benefits PLDT, and to an extent there is power that is needed to access internet. The residential will continue to be an active contributor to revenues for both Meralco and PLDT,” Pangilinan said.

“And as manifested in the balance of trade position, there’s been an increase in the level of imports, which indicated that the manufacturing sector is starting to rev up its facilities. I do hope it continues,” he said.

Meralco chief finance officer Betty Siy-Yap said first quarter core net income slipped by 11 percent from P5.72 billion to P5.11 billion.

However, reported net income surged 66 percent to P4.33 billion, which is attributed to foreign exchange gains, revaluation of Meralco’s carrying equity in GBPC and non-core items.

“Forex is a small amount.  We recorded a forex gain of P52 million. When we account for consolidated core net income we remove forex gains. For GBPC, revaluation of the existing carrying amount of our 14 percent equity in GBPC is about P207 million. The other item is non-core expenses of P705 million and this relates to the implementation of provisions of the CREATE bill,” Siy-Yap said.

Revenues declined by seven percent from P75.38 billion to P70.03 billion, wherein 97 percent came from electric revenues.

Siy-Yap said the revenue decrease was due to the lower volumes distributed and overall lower generation and transmission pass-through charges.

“Despite strong sales from residential and industrial, commercial continued to struggle as restaurants failed to recover,” she said.

In terms of energy sales, volume declined by four percent to 10,473 gigawatt-hours (GWh) even as customer count went up by four percent to 7.205 million as of end-March.

Residential customers accounted for almost 35 percent of consolidated sales volumes at 3,616 GWh.

Meralco said the general community quarantine (GCQ) and the re-imposition of the enhanced community quarantine (ECQ) beginning March 29 saw residential volumes taking a bigger share in the total volumes sold as work-from-home arrangement and stay-at-home policies prevailed throughout the first quarter of 2021.

Industrial sales volume was at 31 percent, representing 3,261 GWh, while combined commercial sales volumes were at 34 percent of the total in 2021 compared with 40 percent in 2020 with total volume at 3,560 GWh.

The power firm said industrial sales volumes bounced back during the quarter with the increased demand for steel and cement as the government’s Build Build Build (BBB) projects are being fast-tracked as well as essential goods to provide for a predominantly consumption-driven economy; and semiconductor components with the increasing use of gadgets.

Meanwhile, Meralco said the recovery of business of hotels, restaurants and education sectors is not expected until further easing of community restrictions, which is expected only when herd immunity is achieved.

While the commercial segment’s performance was still down, Meralco president and CEO Ray Espinosa cited the strong performance of the residential and industrial sectors, respectively, during the period.

“There has been actually some uptick in consumption, particularly in March and April. I would associate that with the fact that enhanced community quarantine as it were is not the same in 2020. Even if we are in ECQ today, it’s more relaxed than the first one. The lockdown is not that punishing,” he said.

“There’s more economic activity and that translated to higher demand and sales for us. Our sales will exceed those of last year,” Espinosa said.

In 2020, Meralco’s reported a one percent rise in net income to P23.02 billion. Core net income went up six percent to P22.41 billion.