Meralco posts higher profits in H1, but Delta variant a threat

MANILA, Philippines — Manila Electric Co. posted higher earnings in the first half, but the company said the arrival of the highly infectious Delta variant brings a new threat to recovery.

The country’s largest power distributor posted a core net income of P11.4 billion from January to June, up by 8% year-on-year. But Manuel V. Pangilinan, company chief executive, told reporters in a press conference Monday that the Delta variant is making Meralco’s outlook murky.

“We can’t see the impact on sales moving forward when we announce Q3 results. We’re quite optimistic profit will be ahead given our projections,” Pangilinan said.

“Meralco did quite well. Residential still up, that’s because commercial industrial is starting to recover a bit. Barring this delta variant, hopefully, the economy will recover,” he added.

Broken down, gross revenues grew 8% year-on-year to P149.1 billion in the first half. Meralco’s earnings before interest, taxes, depreciation, and amortization — another gauge of financial health — soared 52% year-on-year to P11.266 billion, coming from a low base.

A bright star of Meralco’s financial performance was the industrial segment, up 23% year-to-date, as energy sales return to 2019 levels, the company said. Even the commercial segments show 0.2% growth year-to-date as pandemic restrictions eased in past months, particularly at the end of the first half this year.

The work-from-home norm pushed sales from the residential segment by 3%  on-year, with socialized and mass-housing pitching in for this small growth.

Meanwhile, Meralco saw its operating expenses inch up 14% year-on-year to P15.7 billion, as the utility firm catches up maintenance work. Meanwhile, capital expenditures shot up to 91% to P13.1 billion as Pangilinan-led company moves forward with planned projects.

Shares in Meralco closed at P267 each on Monday, down 0.74%.