Meralco cautious on 2017 prospects

By Danessa Rivera (The Philippine Star) | Updated February 28, 2017 - 12:00am

http://www.philstar.com/business/2017/02/28/1676348/meralco-cautious-2017-prospects

After surpassing its core income target in 2016, power distributor Manila Electric Co. (Meralco) is turning cautious this year as it braces for the impact of global developments and cooler temperature on the electricity demand and energy sales, company officials said yesterday. File Photo

MANILA, Philippines - After surpassing its core income target in 2016, power distributor Manila Electric Co. (Meralco) is turning cautious this year as it braces for the impact of global developments and cooler temperature on the electricity demand and energy sales, company officials said yesterday.

In a briefing yesterday, Meralco chief finance officer Betty Siy-Yap said core net income rose four percent from P18.89 billion in 2015 to P19.58 billion in 2016, slightly beating the company’s core profit guidance of P19 billion.

Consolidated revenues, on the other hand, marginally declined from P258.4 billion to P257.18 billion as lower pass-through fuel prices which muted the impact of the increase in volume energy distributed as well as the lower average consolidated distribution rate.

The company said energy sales went up 8.1 percent to 40,142 gigawatt-hours (gwh) while customer base increased 4.4 percent to 6.04 million customers.

The distribution utility’s positive performance last year was attributed to the generally warmer weather and the robust economic landscape, Meralco president Oscar Reyes said in the same briefing.

“If you had a perfect storm, this was perfect weather. Number one, economy was buoyant and strong with growth at 6.8 percent, we had much warmer temp particularly in the first five months of 2016. Low inflation, low interest rates were favorable for consumers and at the same time, we saw remittances from OFWs as well as revenues of BPOs continued to increase and this provided a strong basis for consumer spending to be very strong and, as a result, I am pleased to advise Meralco continued to have a reasonably, favorably year,” he said.

While Meralco management remains positive for 2017, it has deferred the announcement of its profit guidance until it gets a sense of the demand profile this year, Meralco chairman Manuel Pangilinan said.

“The first two months, looking at billed volume in January, rose 6.9 percent which was excellent. Then February sort of turned south at 1.4 percent. It’s difficult to ascertain demand profile for 2017 would look like so consensus was to defer guidance until we get a better sense,” he said.

Among the uncertainties Meralco is looking at this year include the temperature, prices of oil, coal and commodities as well as the foreign exchange performance with the looming interest rate hike in the US.

Reyes said coal prices have already moved from around $50 to $100 while oil rose from $30 to $50 and is expected to rise further to $60-70.

He also said the company is monitoring the peso’s performance with the looming interest rate hike in the US, which will further strengthen the US dollar against other currencies.

“These are things that require…monitoring and anticipated action or reaction, how do we offset the adverse negative effect on our operations and on consumers pockets,” Reyes said. “There’s some view to being prudent and deferring any guidance until we see the shape of what’s happening.”