Electricity distributor posts flat profit as of September

Business World Online

Posted on October 25, 2013 07:21:06 PM

MANILA ELECTRIC Co. (Meralco) recorded flat net income in the nine months to September, mainly due to the absence of a one-time gain like the one from divestment of its stake in Rockwell Land Corp. the previous year, according to unaudited consolidated financial highlights attached to the company’s disclosure on Friday.

Net income slipped to P13.644 billion as of September from P13.646 billion in the same nine months last year, while core net income -- which strips out one-time gains or losses -- edged up 5.2% to P13.558 billion from P12.892 billion.

Third-quarter data were not immediately available.

"The reported net income is flat because last year we recognized one-time gains like the divestment of Rockwell Land shares, which is more than P770 million without tax," Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, told reporters in a briefing at the company’s headquarters in Pasig City yesterday.

In the same comparative nine-month periods, revenues sank 3.1% to P208.097 billion from P214.749 billion. Revenues from electricity sales slipped 3.6% to P205.321 billion from P213.093 billion, while non-electricity revenues jumped 67.6% to P2.776 billion from P1.656 billion.

Meralco, in a statement attached to its disclosure, said the lower total revenue was the result of "significant lower average price of purchased power under five new power sales agreements implemented shortly before the start of the current year."

"Pass-through charges amounting to P163.0 billion consisting of generation and transmission costs and system loss (excluding related taxes) which represent 79% of electricity sales decreased by 7%," the statement read.

Costs and expenses fell 5.4% to P188.672 billion from P199.410 billion.

Volume of electricity sales actually grew 4.8% to 25,616 gigawatt-hours (GWh) from 24,448 GWh, buoyed by an increase in demand of residential, commercial and industrial customers of 5.6% to 7,775 GWh, 5.5% to 9,965 GWh and 3.1% to to 7,778 GWh, respectively.

"The company continued to register favorable results on the back of reasonably strong sales performance," Meralco President Oscar S. Reyes said in the same briefing.

Volume of electricity sales grew, Mr. Reyes noted, "despite a major weather disturbance last August 19-20".

"At the height of Typhoon Maring (International Codename: Trami), Meralco was constrained to de-energize several circuits to ensure the safety of residents in severely flooded areas of Metro Manila, Rizal, Laguna, Bulacan and Cavite," Meralco said in a statement.

The same statement quoted Meralco Chairman Manuel V. Pangilinan as saying: "We remain positive about our distribution business and prospect of our power generation initiatives."

"The equity stakes we have taken in Global Business Power Corp. (Global Power) here and PacificLight Power Pte. Ltd. in Singapore will provide us easily income and cash flow accretion, even as we pursue new builds of base load and mid-merit power plants in Luzon and other parts of the country," Mr. Pangilinan said.

Meralco -- through Meralco PowerGen (MGen) -- last Tuesday completed the acquisition of a 20% stake in Global Power following the signing of a shareholders’ agreement with First Metro Investment Corp. 

MGen has also partnered with First Pacific Co. Ltd. to form PacificLight, which in turn holds a 70% stake in GMR Energy Singapore Pte. Ltd. -- owner and developer of an 800-megawatt (MW) natural gas power plant on Jurong Island, Singapore.

MGen plans to develop a diversified power portfolio of up to 2,700 by 2020. The company has partnered with Aboitiz PowerCorp. to form Redondo Peninsula Energy, Inc. -- proponent of a 600-MW coal-fired power plant in Subic, Zambales.

It is also looking at developing several natural gas power plants in the provinces of Quezon and Batangas.

With favorable year-to-date performance, Mr. Pangilinan said the company will "likely exceed" its target core profit for 2013.

"The resurgence of investor confidence in the country and strong consumption spending continue to drive growth of the economy, as reflected in the steadily increasing electricity sales volume across our industrial, commercial and residential customers," he said in the statement.

"Given our performance to-date and the positive outlook for the remainder of the year, it is likely that Meralco’s consolidated core net income for full year 2013 will exceed our earlier guidance number of P17 billion."

Meralco distributes electricity in Metro Manila, Bulacan, Cavite and Rizal as well as parts of Batangas, Laguna, Quezon and Pampanga.

Its shares gained P3 or 0.97% to close P311 apiece on Friday from P308 each on Thursday.

Beacon Electric Asset Holdings, Inc., which has the biggest stake in Meralco, is partly owned by the Philippine Long Distance Telephone Co (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a minority stake in BusinessWorld. -- Claire-Ann Marie C. Feliciano   source