Meralco’s core income falls 11% to P10.4 billion in first half

by Myrna Velasco – July 25, 2016

from Manila Bulletin

With the combined impact of lower distribution charge and lack of one-off recovery for the period, the core income of Manila Electric Company (Meralco) had been down 11-percent to P10.4 billion in the first half from last year’s P11.7 billion in the same period.

According to Meralco Chief Finance Officer Betty C. Siy-Yap, last year’s income was partly buoyed by P800 million fetched from the company’s Generation Rate Adjustment Mechanism (GRAM) recovery.

On reported net income, it was also slashed by 8.0-percent to P10.8 billion from the year-ago level of P11.7 billion.  The company’s core earnings per share had been at P9.21 ; while reported earnings per share stood at P9.554.

The lower income was despite the growth in sales volume during the first six months, primarily propelled by the record high increase in volume sales during the hot months of May and June this year.

In view of current developments, Meralco President Oscar S. Reyes noted that the guidance for the whole year income will stay at P19.0 billion as earlier indicated by company chairman Manuel V. Pangilinan.

“Before we change our guidance, we have to look at third quarter. The reason is we’ve seen our growth rate drop to single digit…until then, we hold off any adjustment in our guidance,” he stressed.

For the second quarter, core income stood at P5.29 billion which is lower from last year’s P7.22 billion.

Revenues in this year’s January to June period also dropped around 4.0-percent to P128.8 billion because of lower pass-through charges on account of cheaper fuel costs, primarily coal and oil prices.

Meralco emphasized that it reduced its average distribution tariff to P1.44 per kilowatt hour (kWh) starting July 1, 2015 from P1.59 per kWh following the completion of its 3rd regulatory reset under performance-based rate-setting (PBR) scheme.

On volume growth, Meralco said its electricity sales expanded 11-percent year-on-year to 19,717 gigawatt hours (GWh) “with record peak demand at 6,748MW as at June 30, 2016.”

It stressed that “the highest ever single month consolidated sales volume was recorded in June 2016 at 3,637 GWh,” noting further that “year-to-date double digit growth in sales volumes for 2016 was sustained, even with the moderate 6.0-percent growth for the month of June 2016.”

The utility firm emphasized that “looking at the bigger picture, the overall increase in electricity sales volume of 11-percent helped mitigate the effect of the 9.0-percent decline in average Meralco distribution rate; and lower first half 2016 contribution from certain subsidiaries due in part to seasonal factors affecting their businesses.”