Meralco’s net profit fell 3% to P10.5b in six months

by Alena Mae S. Flores – August 03, 2017 at 08:05 pm


Manila Electric Co., the country’s largest power retailer, said Thursday net income declined 3 percent in the first half to P10.5 billion from P10.77 billion a year ago, despite a 9-percent increase in revenues.

Meralco said core income dropped 2 percent in January to June to P10.1 billion from P10.388 billion a year earlier.  Core income in the second quarter also fell to P5.5 billion from P5.8 billion.

Meralco chief finance officer Betty Siy-Yap noted the lower contribution of subsidiaries’ projects.  “Retail electricity income, which ushered in more competition, has been more intense. Retail electricity income is slightly lower,” Meralco chief finance officer Betty Siy-Yap said.

Non-electric revenues declined 10 percent to P3.6 billion from P4 billion in the same period last year, creating a drag on operating income.

Meralco attributed the lower non-electric revenues to the net effect of the delayed award of projects and slow validation of work accomplishments of Meralco Energy Inc.  and Meralco Industrial Engineering Services Corp.

The two project owners held back on proceeding with certain scheduled projects and also took longer in confirming work accomplishments.

This was partly offset by increased bills payment volumes from CIS Bayad Center Inc. as a result of an expanding customer base and high service reliability.

Consolidated revenues in the first half grew 9 percent to P141 billion from P128.8 billion in the same period in 2016 due to pass-through costs.

Meralco said the higher revenues resulted from the combined effect of a 3-percent increase in volume of energy sold;  higher generation charge related to the 20-day maintenance shutdown of the Malampaya gas facilities, which required the use of higher cost liquid condensate for the Sta. Rita and San Lorenzo plants and bio-diesel for the de-rated Ilijan plant;  the extended maintenance outages of certain coal-fired power plants; and the depreciation of the peso versus the US dollar to P50.47 as of June 30, 2017 from P47.06 to the dollar on June 30, 2016.

The average distribution rate of Meralco was P1.42 per kWh, or one centavo  lower than in 2016, as the sales mix reflected a slightly higher share of the combined commercial and industrial volumes over residential volumes.

The increase was partly offset by the effect of lower global prices of coal and oil;  lower top line contribution from non-electric subsidiaries; and  lower overall retail revenues of Meralco’s retail electricity supply unit, MPower, and Vantage Energy Solutions and Management, Inc. as a result of the temporary disruption in commercial operations of distribution utilities  and electric cooperatives retail electricity suppliers or RES and intensified competition in the RES market.

Meralco chairman Manuel Pangilinan said  the sustained growth and sound fundamentals of the economy, healthy domestic and foreign investor confidence and strong consumer demand provided the underpinnings for further electricity sales volume growth in the first half, notwithstanding the high base effect of 2016.

“These have enabled on to register good financial results at a level broadly similar to the previous year, and to maintain a strong balance sheet and liquidity position, critical to supporting heavy capital expenditures for our distribution business and investments for our planned power generation portfolio,” Pangilinan said.