DMCI net drops 36% led by power

Business World Online
Posted on August 20, 2014 09:27:00 PM

DMCI Holdings, Inc. on Wednesday reported a 36.15% drop in net income for the second quarter, on the absence of one-time gains from a year earlier, with recurring profit coming in flat due to the weak performance of its power and construction businesses, as well as a reduced stake in its water unit.

In a report submitted to the stock exchange, DMCI said second-quarter net profit dropped to P2.82 billion from P4.41 billion a year earlier, even as operating revenue jumped 19.48% to P16.39 billion.

This brought the first-half bottom line down 58.2% at P6.3 billion, despite a 10.85% jump in operating revenue to P29.45 billion.

Removing the P8.354-billion one-time gain from the sale of a portion of its stake in Maynilad Water Service, Inc., core profit for the first six months was little changed at P5.1 billion.

“The sustained net income was a result of mixed performances of the business units,” the company explained in the report.

First-semester net profit of its power business fell 94% to P108 million, dragged down by “extended outages” of DMCI Power Corp.’s Calaca Plant Unit 2 in Batangas City.

Construction, under D.M. Consunji, Inc. and DMCI Project Developers, Inc., fell 11% to P602 million, on the back of a 5% decline in revenue to P7.9 billion, “mainly due to right-of-way issues which delayed some big infra projects.”

“Net income of the construction segment declined due to lower reported completion revenue from new projects,” the company said.

The bottom line at water subsidiary Maynilad slipped 9% to P977 million, amid a 2.1% increase in operating income to P5.3 billion.

“Reported net income grew significantly at 20.7% to P3.99 billion from P3.31 billion in the prior year, due to last year’s front end fees on refinancing, that increased the prior year’s interest expenses. However, after adjustments at the consortium company level, the Company’s first-half equity in net earnings reported a 9% decline from P1.1 billion last year to P1 billion this year due to a lower effective interest...” the company said.

In February 2013, MCNK JV Corp., a subsidiary of Marubeni Corp., acquired 20% effective ownership in Maynilad, cutting DMCI’s stake to 25% from 41%.

By way of contrast, net profit of its nickel business under DMCI Mining Corp. rose 708% to P365 million, reversing a P60-million loss in the same period last year.

“The turnaround is a result of significantly higher prices and ramping up of production and shipments in the second quarter of 2014,” the company said.

Net profit of its coal business under Semirara Mining Corp. was up 524% at P1.52 billion, on the back of a 32% increase in volume.

Its real estate arm, led by DMCI Project Developers, saw its bottom line rise 29% to P1.65 billion, on the back of a 10% rise in revenue, mainly due to higher sales recognized from completed projects this year.

“Increase in revenue together with income from forfeitures or penalties and sale of parcels of lots resulted to a higher net income growth,” the company said.

Early this month, DMCI President Isidro A. Consunji said the company is expecting flat profits for the rest of the year, “between P9 billion and P10 billion,” close to the P10.6 billion the conglomerate reported the year before. -- Daphne J. Magturo source