Meralco Q2 profit declines on lower contribution from units

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EARNINGS of Manila Electric Co. (Meralco), the country’s largest power retailer, slid in the second quarter dragged by the lower contributions of its subsidiaries and increased competition in the retail electricity business.

Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said in a briefing on Thursday at the company’s headquarters in Pasig City its reported net income fell by a tenth to P5.6 billion in the April to June period from P6.2 billion in the same period last year.

Core net income, which excludes one-time, exceptional gains and charges, dropped 5% to P5.5 billion in the three-month period from P5.8 billion a year ago, Ms. Yap added.

In the first half, consolidated core net income slid by an annual 3% to P10.1 billion from P10.4 billion. Reported net income decreased 2% to P10.5 billion from P10.7 billion.

Meralco attributed the drop in earnings to lower global prices of coal and oil, a decline in top line contribution from non-electric subsidiaries due to the delayed award of some projects, and a decrease in overall retail revenues.

Consolidated revenues rose 9% to P141 billion in the January to June period from P128.8 billion a year ago, as energy sales climbed 3% to 20,338 GWh from 19,717 GWh sold in the same period last year.

The average Meralco retail price was at P8.10 per kWh for the first half of 2017, which the generation, transmission, distribution, system loss, and taxes and universal charge components represent 55%, 10%, 18%, 4% and 13%, respectively.

Meralco President and CEO Oscar S. Reyes noted the company managed to grow energy sales despite coming from a high base a year ago when sales growth reached 11%.

Meralco Chairman Manuel V. Pangilinan did not give a profit guidance for the year, but issued a favorable outlook on the business.

“We continue to be encouraged by the optimum, locally and overseas, of the country’s ability to sustain its robust growth trajectory and its continuing transformation to a regionally competitive economy. This will be achieved mainly through massive infrastructure development, a comprehensive tax reform program and an effective tax collection system, energy, water, and telecommunications security, policy and regulatory stability, and maintenance of peace and order, among others,” Mr. Pangilinan said.

“Despite some regulatory challenges, we remain optimistic about the business for the remainder of the year as we continue to find new ways to grow our revenues from serving our customers, as well as finding ways of operating more efficiently,” he added.

Shares in Meralco added P6 or 2.19% to close at P279.60 apiece on Thursday.