Friday, August 4, 2017

Revenue rise fails to lift Meralco’s profits in H1

By Lenie Lectura - August 3, 2017

THE Manila Electric Co. (Meralco) posted lower profits in the first six months of the year, despite an increase in revenues during the period.
The utility firm’s core profit reached P10.1 billion, 3-percent lower than the P10.4 billion Meralco posted in the same period a year ago. Reported net income at end-June this year was also lower at P10.5 billion, a reduction of 2 percent from January-to-June 2016 figures.
Revenues, however, stood 9-percent higher at P141 billion, compared with P128.8 billion in the same period in 2016.
The higher revenues are the result of the combined effects of several factors, Meralco said. The company cited there was a 3-percent increase in volume of energy sold and an increased generation charge related to the 20-day maintenance shutdown of the Malampaya gas facilities—which required the use of higher cost liquid condensate for the Santa Rita and San Lorenzo plants and biodiesel for the derated Ilijan plant—and the extended maintenance outages of certain coal-fired power plants. Meralco said the depreciation of the peso against the greenback also contributed to revenue increase.
However, company revenues were partly offset by the effect of lower global prices of coal and oil, lower top line contribution from nonelectric subsidiaries and lower overall retail revenues of Meralco’s retail electricity supply (RES) unit MPower and affiliate RES unit Vantage Energy Solutions and Management Inc.
Meralco Chief Finance Officer Betty Siy-Yap said core profit in the second quarter slightly dipped to P5.5 billion, from P5.8 billion a year ago.
“One of the reasons was the contribution of Meralco subsidiaries because of a delay in the award of some of the project,” Yap explained. “With respect to retail income, competition has been more intense and prices have come down.”
Meralco Chairman Manuel V. Pangilinan did not provide an outlook for the company’s full-year performance.
However, Pangilinan said it is possible that Meralco can duplicate its first-half earnings in the second-half period.
“It is best, perhaps, to give an outlook closer to the third quarter. We will be in a better position to indicate by then,” he said during a news conference. “It is, however, entirely possible to duplicate the first-half numbers in the second half.”
Pangilinan said the sustained growth and sound fundamentals of the Philippine economy, healthy domestic and foreign investor confidence and strong consumer demand have provided the underpinnings for further electricity sales volume growth in the first half of 2017.
Electricity sales volume grew by 3 percent year-on-year to 20,338 gigawatt hour (GWh) to 20,338 GWh, despite the high-base effect of the same period in 2016, where volume surged by 11 percent to 19,717 GWh. System peak demand was up 3 percent at 6,973 MW recorded in June 14, over 6,748 MW on May 4, 2016. Commercial sales volumes were at 8,045 GWh, about 4 percent higher than in 2016, accounting for 40 percent of the total energy sold. Industrial sales volumes grew by 3 percent to 5,892 GWh year-on-year, accounting for 29 percent of the total GWh sales. Residential   sales volume also went up by 3 percent to 6,333 GWh due largely to the growth of Meralco’s customer base which stood at 6.2 million at end-June this year.

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