Meralco profit drops on lack of one-time gains

By Danessa Rivera (The Philippine Star) | Updated July 26, 2016 - 12:00am

http://www.philstar.com/business/2016/07/26/1606526/meralco-profit-drops-lack-one-time-gains

MANILA, Philippines - Power utility giant Manila Electric Co. (Meralco) reported lower earnings in the first half of 2016 due the absence of one-off recovery gains and lower distribution tariff.

Company officials maintained that full-year income would be similar to last year’s figure.

In a briefing yesterday, Meralco SVP and CFO Betty Siy-Yap said first half net income reached P10.4 billion, down 11 percent from P11.8 billion.

Reported net income likewise slipped eight percent to P10.8 billion.

“Last year, we had a regulatory approval of the GRAM, which provided an income. There was a one-off item in 2015 which wasn’t seen this year. We had the generation rate adjustment mechanism (GRAM),” she said.

The GRAM amounted to around P800 million, a recovery from the 2003 to 2004 period which was only recovered in the first half of last year.

Another factor that pulled the company’s income is lower distribution rate which began July 1, 2015, Meralco president Oscar Reyes said.

“Meralco took initiative of reducing its distribution tariff from P1.58 per kilowatt-hour to P1.38 per kwh in July 2015, following the completion of the third regulatory period. So second half 2015 to second half 2016, the tariff is at the same level already,” he said.

Total energy sales for the first semester grew 11 percent year-on-year to 19,717 gigawatt-hours (gwh), with the highest single month consolidated sales volume recorded in June.

Reyes cited the warmer temperature, the increase in number of customers, record low inflation and low electricity prices as contributors to record sales performance.

Consolidated revenues, however, fell four percent to P128.8 billion due to lower distribution rate, lower pass-through charges amid the drop in coal and crude oil prices and higher availability of its contracted power plants.

When asked about its income projection for this year, Reyes said they would wait for the third quarter results before revising Meralco’s core profit guidance. “We’ll hold off any adjustments in our guidance after the third quarter results,” he said.

 “For now, we are still looking at being able to achieve a consolidated net income that is generally not far from what we registered in 2015, something in the vicinity of P19 billion,” Reyes added.

Last year, core net income went up four percent to P18.89 billion.