Tuesday, July 26, 2011

Rate hike lifts Meralco 1H earnings

Manila Times.net  Written by : Published : Tuesday, July 26, 2011 00:00


MANILA Electric Co. said its first-half profit jumped by over a quarter as a result of an increase in distribution rates.

In a press conference, Oscar Reyes, Meralco chief operating officer, said the company’s net income rose by 26 percent to P6.1 billion in the first six months of this year from P4.8 billion in the same period last year.

Its core earnings, which exclude foreign exchange changes and other non-recurring items, increased by 35 percent to P7.8 billion from P5.8 billion last year.

Meralco’s distribution charge rose to P1.65 per kilowatt-hour this year from P1.49 last year. The tariff hike is part of the utility’s performance based regulation, a rate-setting scheme that allows the company to raise its rates based on its performance and spending requirements.

The increase allowed the company to offset a 1.1 percent dip in its overall sales, from 14,781 gigawatt-hours last year to 14,646 this year.

“The decrease is the result of the cooler temperature, reduced manufacturing as a result of the calamities in Japan and this year being a non-election year,” Reyes said.

Despite the reduction, first-half electricity revenues closely mirrored the company’s record sales in 2010, when revenues rose 14 percent from 13,1118 gigawatt-hours in 2009.

Manuel Pangilinan, Meralco chairman, said the company projects core earnings to reach P14 billion in 2011 from 12.2 billion last year should sales continue to track the 2010 performance.

The company is allocating half of its first-half core earnings for cash dividend payouts starting in the first half at P3.45 per share to all stockholders of record as of August 17, payable on September 13.

“The board has reaffirmed its dividend policy, being regular dividend equivalent to 50 percent of core net earnings and a ‘look-back’ approach at yearend to determine if a special dividend is warranted,” Pangilinan said.

Prior to the double-digit growth last year, Meralco’s sales expansion averaged only 2.2-percent annually over the past five years.

Besides Meralco’s tariff hike, growth in the company’s customer base and a reduction in system losses helped propped up its income.

In the first half of the year, the utility’s customer count rose 3.2 percent to 4.93 million, more than 90 percent of which were residential customers. Is system losses improved by 0.45 percent to 7.48 percent of electricity sales.

Meralco’s shares fell to P278 on Monday from P280 last Friday.

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