Meralco core income up 6.3%

MANILA Electric Co. (Meralco) reported a 6.3% growth in 2019 core net income to P23.83 billion as the power distribution utility recorded strong energy sales with the steady electricity usage by customers in online casinos and business outsourcing firms.

“Electricity revenues amounting to P310 billion was stable at 97% of gross revenues compared with P295.4 billion in 2018,” said Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, in a briefing on Monday to present the company’s operating and financial results last year.

“Aggregate distribution revenues grew by 6% in 2019 to P65.9 billion versus 2018, reflecting the impact of higher volume distributed and the sales mix,” she said.

Excluding one-off items, reported net income rose 1.2% to P23.29 billion. The figure was adjusted to exclude the effect of foreign exchange gains or losses, impairment charges, mark-to-market adjustments and other exceptional transactions.

In the fourth quarter alone, core net income rose by 5.9% to P5.38 billion, while reported income increased by 3.1% to P4.96 billion.

Last year’s income comes as the listed utility recorded a 5.8% rise in energy sales to 46,871 gigawatt-hours (GWh). The year’s growth rate was the highest in the past three years.

During the year, residential customers registered the biggest growth rate in terms of consumption at 7.6%, or faster than those of the two other customers segments commercial and industrial, which recorded growth rates of 5.8% and 3.8%, respectively.

Still, commercial customers made up the biggest share of Meralco’s customer base with a share of 39.4%. Residential comprised 31.1% while industrial accounted for 29.3%.

“POGO (Philippine offshore gaming operators) and BPO (business process outsourcing) is creating a new breed of condominium dwellers,” said Victor S. Genuino, Meralco first vice-president, during the briefing.

Mr. Genuino, who is also head of customer retail services and corporate communications, said a growing customer base outside Metro Manila is also contributing to the growth.

Meralco ended the year with a customer count of 6.883 million, up 41% from 6.615 million in 2018. Again, residential users recorded the biggest growth rate at 4.2% to 6.339 million to make up 92.1% of the utility’s customer count.

“Maraming residential units na tini-turnover na (Many residential units are being turned over). That’s also part of the growth drivers. Buoyant kasi ‘yung real property sector (The real property sector is buoyant), not just for POGO, which is on the commercial side but also on the residential side. The more residential units are turned over and occupied then that contributes to the energy sales,” said Ray C. Espinosa, Meralco president and chief executive officer.

Asked whether this year’s residential sales growth could duplicate last year’s, he said: “If you look at the schedule of the property developers in terms of development completion and turnover, puwede (possible).”

He said power consumption by the industrial sector would be down as it is affected by “supply chain issues created by the coronavirus in China.”

Meralco Chairman Manuel V. Pangilinan, who was not present during the briefing, said in a statement that initial operating results in January 2020 and indicative for February “are positive.”

“We will continue to execute our investments with significant ambition in power generation, and other strategic high growth areas amidst the challenges,” he said.

Among the highlights last year is the commercial operation during the fourth quarter of the P56.2-billion San Buenaventura Power Ltd. Co. (SBPL), the country’s first supercritical coal-fired power plant, which now provides additional supply to the Luzon grid.

Rogelio L. Singson, president and chief executive officer of Meralco PowerGen Corp. (MGen), said the plant was able to deliver 852 GWh to distribution company.

“As of today we are running at full capacity at net 455 MW,” he said, adding that the plant contributed P300 million to Meralco’s bottomline last year.

On Monday, shares in Meralco slipped by 2.96% to close at P262 each.

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