Meralco core profit up 7% on energy sales rise

MANILA Electric Co. (Meralco) said core profit was P5.93 billion in the second quarter, up 7.4% year-on-year, as the country’s biggest power distribution utility posted higher energy sales during the period.
Including one-time items, net profit was P6.66 billion, up 17%, after revenue rose 7% to P79.74 billion, the bulk of which came from electricity sales.
“The higher revenue is the result of the combined effect of the 7% increase in volume of energy sold, and increase generation charge brought about by higher fuel prices, the weakening of the peso versus the US dollar, higher prices at the wholesale electricity spot market, as well as higher local consumer price index,” said Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, during a briefing at its headquarters on Ortigas Ave., Pasig City.
“The average distribution rate of Meralco was at P1.42 per kilowatt-hour, 1 centavo lower than that of 2017 as the sales mix reflected a slightly higher share of industrial over residential volumes,” she added.
In the first half, consolidated core profit rose 7% to P10.9 billion, while consolidated net profit rose 14% to P12 billion. Revenue was P150.5 billion, up 7%, while volume of energy sold was at 21,665 gigawatt-hours, up 7%.
“2018 is going to be a better year than 2017,” said Meralco Chairman Manuel V. Pangilinan during the same briefing.
But he said he is “cautious” about the second half because of a number of issues, including inflation that could dampen consumer demand at a time when the temperatures are cooler compared with the previous year.
Mr. Pangilinan said that the company should have a better idea of the full-year picture when the utility reports its third quarter results.
Oscar S. Reyes, Meralco’s president and chief executive officer, said customer count at mid-June grew 4.8% to 6.47 million consumers.
“In summary, you will see that the focus on the distribution utility side is for us in Meralco to deliver excellent customer service and operational excellence in fulfilling our franchise mandate,” he said. “That has helped drive our sales and financial results.”
In the first half, electricity sales rose 7% to P146.9 billion amid little change in non-electricity revenue.
Meralco’s non-electric revenue consists mainly of business generated by foreign attachments to the utility’s poles, and revenue from subsidiaries, which include Meralco Industrial Engineering Services Corp. and its subsidiaries from its engineering, procurement and construction (EPC), and operations and maintenance works involving various substations and transmission or telecommunications lines.
In a statement issued during the briefing, Mr. Pangilinan said the company’s board on Monday approved a cash dividend of P5.311 per share to all shareholders of record as of Aug. 29.
“We continue to focus on the operation of a highly efficient and reliable distribution utility, as well as unparalleled customer service,” he said.
The cash dividend is payable on Sept. 24, representing the interim regular cash dividend for 2018.
“One of the few underwhelming numbers was that the cash dividend though fell a little below expectations at just P5.311/[share], representing a payout of 55% of core earnings. Analysts are/were hoping a sudden announcement of a special cash dividend may be announced,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.
On Monday, shares in Meralco rose 0.53% or P2 to P380.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon