DMCI income falls in 2nd quarter

EARNINGS of DMCI Holdings, Inc. fell by a fifth in the second quarter of 2019, weighed down by lower coal prices and higher replacement power costs.

In a statement issued Wednesday, the diversified engineering conglomerate said net income dropped 20% to P3.8 billion in the April to June period, after flattish growth in revenues to P24 billion.

For the first half, net income was down 22% to P6.7 billion on the back of P44 billion in revenues.

“We had a tough first half because of lower average selling price of coal, higher replacement power costs, provisions for project cost overruns, and lower average price for our lower grade nickel,” DMCI Holdings Chairman and President Isidro A. Consunji said in a statement.

Mr. Consunji said in a press briefing late Tuesday that the company incurred about P2.3 billion in replacement power costs for the first half, following the shutdown of Unit 1 of Sem-Calaca Power Corp. for rehabilitation works since December 2018. This is 213% higher than the P742 million in replacement power costs in the same period last year.

The company was further affected by an 18% decline in average selling prices of coal to P2,227 per metric ton (MT) versus P2,710 per MT last year.

“The redeeming factor was the volume of coal, which hit 7.9 million tons, the highest ever so it’s a historic high. The operational efficiencies increased,” Mr. Consunji said.

With the lower coal prices and higher replacement power costs, Semirara Mining and Power Corp. (SMPC) delivered a 26% decline in net income contribution to P3.4 billion. Without non-recurring items, SMPC’s core net income contribution was still down by 26% to P3.6 billion.

SMPC recognized one-time losses worth P334 million for the accelerated depreciation of Calaca Units 1 and 2 in 2018 and the net effect of the share in non-recurring items in 2019, as well as P156 million from a financial contract with Southwest Luzon Power Generation Corp.

It likewise realized a one-time gain of P102 million from money claim of Sem-Calaca against the Power Sector Assets and Liabilities Management Corp. as approved by the Commission on Audit.

Meanwhile, property unit DMCI Homes also reported a 36% drop in net earnings contribution to P1.2 billion due to the absence of the P715-million gain from the sale of land in 2018. Without this, core net income contributions from the unit rose 5% to P1.2 billion thanks to lower project development costs.

Construction firm D.M. Consunji, Inc.’s income share also shed 35% to P440 million to account for cost overruns.

Income share from off-grid energy supplier DMCI Power Corp. improved by 9% to P233 million on the back of higher energy sales to power cooperatives in Masbate, Palawan, and Oriental Mindoro.

For DMCI Mining, net income contribution went down by 22% to P173 million after it sold more lower-grade nickel at lower average selling price.

On the other hand, affiliate Maynilad Water Services, Inc contributed P1.1 billion, 16% higher year on year, due to higher billed volumes and tariff increases. — Arra B. Francia