By Denise A. Valdez, Reporter

EARNINGS of Megawide Construction Corp. plummeted 85% in the third quarter as it took a hit from higher interest rates that increased financing costs as well as delays in ongoing projects under its construction segment.

The diversified engineering firm reported an attributable net income of P63.86 million in the three months to September, falling from P415.05 million last year.

Total revenues shrunk 40% to P5.51 billion amid a 59% jump in direct costs to P4.3 billion.

Financing costs during the period surged 195% to P529.95 million, which further dragged the company’s bottomline.

From January to September, Megawide’s attributable net income was halved to P649.72 million. Revenues went up 7% to P13.69 billion, failing to offset the 14% increase in direct costs to P10.39 billion.

Other operating expenses jumped 13% to P125 million due to overhead expenses from operating the new Terminal 2 of the Mactan-Cebu International Airport (MCIA).

Financing costs for the nine months likewise rose 44% to P1.12 billion, which the company attributed to its outstanding loan for the construction of MCIA’s Terminal 2, on top of new loans that funded the construction of the Clark International Airport.

By business segment, Megawide’s construction business accounted for 77% of total revenues at P10.53 billion, 2% up from last year. Revenues from airport operations grew 25% to P2.71 billion to account for 25% of the total. This was attributed to the 10% higher passenger volume during the period.

Airport merchandising generated P247.54 million in revenues, up 15% from last year, while terminal operations contributed P207 million after opening in November last year.

In a briefing in Ortigas Center Friday, Megawide Assistant Vice-President for Investor Relations Rolando S. Bondoy said the company may miss its year-end target for net income growth.

“Looking at the nine months performance versus the yearend compared to last year, we might fall short (of our target)… Construction is very cyclical… that’s very very volatile. We might not be able to hit the target for this year but for next year we’ll definitely bounce back,” he said.

Megawide previously said it was looking at a flat net income growth by the end of 2019. The company’s full-year net income in 2018 stood at P1.8 billion.

“The coming year will be a lot stronger due to the catch up in construction revenues, normalizing airport operations, and full commercial potential of PITX coming into play. Finance costs are also expected to taper off with loan take outs and possible refinancing at lower interest rates,” Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said in a statement.

Shares in Megawide at the stock exchange ended 0.28 points or 1.62% lower at P17 each on Friday.