Meralco’s net profit dropped 54% to P2.6b in first quarter

By Alena Mae S. Flores – April 27, 2020 at 09:20 pm

Manila Electric Co., the biggest retailer of electricity, said Monday net income dropped 54 percent in the first quarter to P2.619 billion from P5.671 billion a year ago because of its exposure to Singapore Electricity Market, which suffered a huge decline in electricity prices.

Meralco said net income declined with the recognition of the company’s P2.7-billion share in the impairment of investment in PacificLight Power Pte Ltd. amid lower electricity prices in Singapore.

It said core net income actually improved 2 percent in the first quarter to P5.724 billion from P5.598 billion in the same period last year as the company had not yet fully absorbed the lower local demand for electricity under the enhanced community quarantine in Luzon.

“As we communicate our first-quarter results in the midst of this unimaginable impact on our economy, health and healthcare, financial and logistics environment, it may be too early to guide on our earnings outlook for the year 2020. The full tragedy of COVID-19 has yet to unfold. That said, we remain optimistic that we will see a recovery in the overall business environment starting the second half of 2020,” Meralco chairman Manuel Pangilinan said.

“Challenging as the second quarter may be, we saw some silver lining as our April 22, 2020 demand peaked at 5,491 MW [for the first time since the start of the ECQ, which had always hovered at the 3,500 MW to 4,300+ MW range].

Whilst the virus has brought unprecedented pain and sorrow into our lives, we cannot allow it to break us; instead, we shall emerge from this broken world into the light, stronger and wiser,” Pangilinan said.

Pangilinan said while it was too early for a full-year forecast in the wake of the COVID-19 pandemic, Meralco already experienced a decline in volume in April.

“That’s likely to hold true for the entire second quarter so with the lower volumes and lower revenues it is likely that the second-quarter results will come in below the first-quarter results. Below the P5.8 billion we’ve seen for the first quarter,” Pangilinan said.

“We do hope the second half would be better than the second quarter and we are looking forward to that,” he said.

Pangilinan said “COVID-19 is life-changing” and called for a “paradigm shift in everything we do.”

“Knowing how critical power supply is to the people within our franchise area, we will keep the lights on for our customers and provide much needed support to the Government and the private sector. Meralco will play its part, regardless of the condition – this is the assurance we have given to our customers and the government,” Pangilinan said.

Meralco’s gross revenues reached P70 billion in the first quarter, down 7 percent from P75.4 billion a year ago because of the effect of lower generation and transmission pass-through charges, offset by higher energy sales volumes.

Consolidated energy sales volume grew 5 percent to 10,879 gigawatt-hours in the first quarter, which included volume distributed by Clark Electric Distribution Corp.

Residential volumes posted a 12-percent growth quarter-on quarter, providing a total of 3,366 gWh and accounting for 31 percent of total volumes.

Meralco said warmer temperatures and the enhanced community quarantine underpinned the organic sales volume growth as Metro Manila and all provinces reflected double-digit growth percentages.

Commercial sales volumes, which accounted for 40 percent of total volume, grew 5 percent to 4,343 kWh. Real estate, retail trade and hotels and restaurants continued to support growth at 8 percent, 5 percent and 4 percent, respectively.

Meralco said with the ECQ, the delays in construction were expected to result in an estimated 44-percent decline in available new spaces while the comeback of Philippine Offshore Gaming Operators would be realized once the travel ban was lifted.

Industrial sales volumes dropped 2 percent to 3,135 gWh as most sectors registered negative growth, with only the food and beverage and medical products industries registering expansion of 3 percent and 0.5 percent, respectively.

Meralco’s customer count grew 4 percent to 6.9 million for a total year-on-year addition of more than 251,000 new accounts.