CONSUNJI-LED DMCI Holdings, Inc. posted a 27% decline in consolidated net income to P10.5 billion in 2019 after its coal mining and power unit turned in lower contributions last year and a one-time goodwill impairment charge for a mine investment, it said on Thursday.
In a disclosure to the stock exchange, the diversified engineering conglomerate said its core net income dropped by 14% to P12.4 billion, excluding the non-recurring loss of P1.9 billion, mostly coming from the non-cash goodwill impairment.
In the fourth quarter alone, consolidated earnings fell 70% to P1.2 billion, largely because of a 47% reduction in earnings contribution from Semirara Mining and Power Corp. (SMPC) and a non-cash goodwill impairment charge of P1.6 billion for the Acoje mine assets of Zambales Diversified Metals Corp. (ZDMC) and Zambales Chromite Mining Co. (ZCMC).
“Market conditions and regulatory restrictions no longer support our original valuation of ZDMC and ZCMC so the Board decided to write-off the goodwill associated with these investments,” said DMCI Holdings Chairman and President Isidro A. Consunji in a statement.
Excluding non-recurring items, fourth-quarter core net income decreased by 25% to P3.1 billion.
ZCMC was idle in 2019 as it lacked the required permits to start operating. ZDMC was unable to resume full commercial production because of the absence of ancillary permits in other areas.
DMCI Holdings bought the two companies in 2014 when mid-grade nickel prices averaged $49. In 2019, the average selling price of mid-grade nickel plunged 45% to $27, reducing the saleable resource.
Last year, SMPC’s core net income fell 23% to P5.7 billion as power generation and average coal prices both decreased by 22%.
DMCI Homes faced a marked slowdown in project construction, resulting in a 4% drop in earnings contribution to P3 billion.
Affiliate company Maynilad Water Services, Inc. posted a 4% slide in net income contributions to P1.8 billion after higher amortization and depreciation expenses for its capital expenditure program.
D.M. Consunji, Inc. posted a 25% slump in net income share to P906 million with the absence of significant realized claims and savings from projects nearing completion.
In contrast, DMCI Power Corp.’s earnings contribution climbed by 31% to P611 million after the approval of a P1.13 per kilowatt-hour adjustment on its non-fuel tariff for its Aborlan power plant in Palawan.
An 82% rise in nickel shipment boosted DMCI Mining’s core earnings by 56% to P182 million.
Contributions from DMCI Holdings and other investments dipped by 6% to P223 million after a decline in interest income.
On Thursday, shares in DMCI Holdings dropped by 0.56% to close at P5.29 each.
