Business World Online
Posted on October 27, 2014 11:29:00 PM
By Claire-Ann M. C. Feliciano, Senior Reporter
MANILA Electric Co. (Meralco) expects 2014 core profit to come in at nearly P18 billion, reflecting a small increase in sales volume which will help the company exceed the year-earlier core profit of P17.02 billion.
“Based on the nine-month results, we are guiding full-year outlook on a core basis at P17.8 billion,” Meralco Chairman Manuel V. Pangilinan said in a briefing in Pasig City yesterday.
“Our core distribution business, which has so far provided 96% of our bottom line, will continue to focus on service reliability and accelerated energization of our growing number of customers,” he said.
Energy sales volume, Mr. Pangilinan said, is expected to rise by 2.5%-2.8% for the year.
The outlook, which the company deems conservative, took into account the expected lower revenue from distribution charges as approved by the Energy Regulatory Commission (ERC) following an annual revenue requirement review.
“We are pitching the guidance at that level because we are fully aware that a new regulatory tariff became effective in July this year, which was lower compared to the previous year,” Meralco President and Chief Executive Officer Oscar S. Reyes explained.
The ERC earlier ordered Meralco to implement a P1.5562-per-kilowatt-hour (/kWh) distribution rate from July this year to June 2015 from P1.6474/kWh in effect during the previous regulatory year.
“That’s about a P0.10/kWh drop in distribution tariff year on year so that will bring the overall tariff lower for the full year,” Mr. Reyes added.
For the nine months to September, Meralco’s net profit rose 4.9% to P14.308 billion, while core profit -- which strips out one-time gains and losses -- grew 5.4% to P14.286 billion.
Revenue fell 2.5% to P202.890 billion as electricity sales -- which accounted for bulk of the total -- slid 3.1% to P199.042 billion.
Non-electricity revenue, meanwhile, grew 37.1% to P3.848 billion.
The 4% drop in costs and expenses to P181.149 billion helped offset the lower recorded revenues.
LOSSES FROM TYPHOONS
Meralco’s energy sales edged up by 2.5% year on year in the nine months to 26,253 gigawatt-hours (GWh).
“We recorded fairly sluggish energy sales in the first half but this has gone up by 2.5% in the nine months compared to the same period last year with the addition of 637 GWh,” Mr. Reyes said.
The official added that this could have been higher if not for typhoons Glenda and Mario which affected its franchise area in July and September, respectively.
“As a result of typhoons, and Glenda and Mario, we had unrealized sales of 263 GWh,” Mr. Reyes said.
“Without those, our growth would have been 3.5% rather than 2.5%.”
Meralco also sustained over P400 million worth of damage due to these typhoons.
Even with these results, Meralco’s Mr. Reyes said the company’s operating results were “very good and decent in terms of energy sales.”
CAPEX
Meralco yesterday also earmarked higher capital expenditure (capex) levels for next year to improve its distribution network.
“For 2015, I think were looking at capex of around P13.5 billion for Meralco,” Mr. Reyes said during the same briefing.
He noted that this is 17% more than the P11.5 billion actual spending seen for this year.
The same official added that capex will fund new electric capital projects and connections to new areas that have to be energized.
“New areas are opening up like through socialized and commercial housing programs so we have to accommodate new connections by building new substations and facilities,” Mr. Reyes said.
He added that the utility is also making its distribution facilities more resistant to damage from typhoons and other calamities.
“We are also hardening our entire distribution system to be able to withstand more severe typhoons or storms so that consumers are not inconvenienced or put at risk,” Mr. Reyes said.
Meralco distributes electricity in Metro Manila, Bulacan, Cavite and Rizal, as well as parts of Batangas, Laguna and Quezon.
Through Clark Electric Distribution Corp., the company also provides electricity to more than 1,000 industrial customers in Clark Freeport Zone in Pampanga
Shares of Meralco closed unchanged at P264 on Monday.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT).
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. source
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