Meralco core income jumps 18% in 4th quarter

By Victor V. Saulon, Sub-Editor
MANILA Electric Co. (Meralco) posted a core net income of P5.72 billion in the fourth quarter of 2018, higher by 18.2% compared with the P4.84 billion a year earlier largely because of the higher power consumption during the last three months of 2018.
Reported net income, which includes one-time gains, hit P4.81 billion during the quarter, up 7.8% from the P4.46 billion posted in the same quarter in 2017.
Oscar S. Reyes, Meralco president and chief executive officer, described the distribution utility’s performance in 2018 as “another strong year” for the company “partly as a result of relatively conducive economic environment.”
“In terms of GDP (gross domestic product), we’ve seen the last nine years with GDP of over 6% year-on-year, something that the Philippines has managed to move to a new trajectory of growth,” he said during the company’s media briefing at its head office in Pasig City.
For the full-year 2018, core net income rose 10.9% to P22.41 billion from P20.21 billion previously, driven by the 5% increase in volume of energy distributed, higher financing income from the funds deployed due to the improved yields, recognition of service fees, among others.
Reported income was up 13% to P23.02 billion from P20.38 billion.
In terms of energy sales, growth improved by 5.3% to 44,313 gigawatt-hours (GWh), including the volume distributed by subsidiary Clark Electric Distribution Corp., Mr. Reyes said.
Meralco officials said the increase in electricity sales volume was driven by the combined contributions across all customer sectors and the effects of a relatively resilient domestic consumption driven by the rapidly expanding Philippine offshore gaming operators, the steady contribution of the business process outsourcing industry, and the growth in remittance from overseas Filipino workers and migrants.
“Customer base also expanded 4.6% to 6.61 million customers,” Mr. Reyes said.
Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said gross revenues last year grew to P304.5 billion, 8% more than the P282.6 billion recorded the earlier year.
She said the increase was a result of higher sales volumes and pass-through charges. These in turn resulted from higher average fuel prices, a weaker peso, higher prices at the wholesale electricity spot market.
“That’s specifically for generation charge,” she said.
Electricity revenues, which accounted for 97% of gross revenues, totaled P295.4 billion, up from P275.2 billion, she said. Generation and other pass-through components as a percentage of total electricity revenues was at 79% in 2018, a percentage point higher than in 2017.
“On a quarterly basis, the fourth quarter revenues were higher than the third quarter when major weather disturbances resulted in unserved energy. Adding to the increase is the continued wrap up of office and retail spaces,” she said.
“Also, sales in the last quarter of the year is normally boosted by higher consumption, the increase in production activities to keep up with demand, and longer operating hours of malls and other establishments during the Christmas season,” she added.
OUTLOOK
Meralco Chairman Manuel V. Pangilinan expressed optimism about the distribution utility’s performance this year.
“Financial indicators are good, volume is good, customer account is better,” he said. “We just have to make sure that the tariff for the fifth regulatory period should be okay.”
The Energy Regulatory Commission regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.
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.