Meralco reports P6.1-B H1 income

Manila Bulletin

By MYRNA M. VELASCO

July 26, 2011, 3:04am

MANILA, Philippines — The adjustment in its distribution charges has pulled up the reported net income of Manila Electric Company (Meralco) to P6.1 billion in the first half, higher by 26 percent from last year’s P4.8 billion.

The company’s core income similarly trailed upward toP7.8 billion, posting an increase of 35 percent from the year-ago level of P5.8 billion.

Given the company’s robust performance for the period, Meralco president and chief executive officer Manuel V. Pangilinan set out a core profit target of P14 billion that must be achieved by the company this year.

Pangilinan enthused “on the basis that our electricity sales in the second half this year will be broadly similar to that realized in the first half, and reflecting slightly lower distribution tariffs as a consequence of the third regulatory period, we are guiding our core net income for the full year of 2011 at P14 billion, 15% better than last year.”

The annual demand growth in electricity underpinning the company’s operational benchmark has been set at 3.5 percent – factoring in both economic and population growths.

Similarly, the company’s board of directors approved yesterday the payment of an interim cash dividend of P3.45 per share based on 50 percent dividend payout of the utility firm’s first half core net earnings, with Pangilinan emphasizing that “this interim dividend will be the highest so far in Meralco’s 108-year history.”

The adjustment in the company’s tariff as reinforced by the performance-based regulation (PBR) regime somehow offset the lower sales logged by the company during the period to 14,781 gigawatt hours (GWh) from the 2010 level of 14,950 GWh.

“Our strong first half sales volume closely mirrored our record sales in first half of 2010,” Meralco senior executive vice president Oscar S. Reyes noted, adding that this helped greatly to prop the utility firm’s bottom-line. This has been in tandem with the 16-percent increase on the company’s rates implemented during the period.

Company officials reiterated that “the adjusted distribution rate driven largely by the implementation of the tariff adjustment for the fourth regulatory year of the second regulatory period, the higher volume sold to commercial customers and lower operating costs resulted in an even better performance.”

There was a 3.3-percent reduction logged in sales to residential customers though due to “cooler temperatures” as compared to the El Niño stricken first half in 2010.