MPIC income down for first time in history

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By Denise A. Valdez, Reporter

METRO Pacific Investments Corp. (MPIC) posted a lower core net income in the first quarter, the first time it happened in its history, as its profits were halved as an effect of the enhanced community quarantine (ECQ) in mid-March to contain the coronavirus disease 2019 (COVID-19).

The conglomerate reported a 47% drop in attributable net income to P1.9 billion during the January-to-March period. Core net income slipped 6% to P3.4 billion.

System-wide revenues including Manila Electric Co. slid 6% to P87.8 billion, traced to the reduced traffic in toll roads, suspension of rail operations and lower commercial and industrial demand for water and power.

By business segment, MPIC’s power business contributed P2.87 billion (+7% year-on-year), toll roads added P918 million (-18% y-o-y) and water pitched in P859 million (-5% y-o-y). The hospitals, logistics and other business segments accounted for a net loss of P19 million.

In a virtual press briefing on Wednesday, MPIC Chief Finance Officer David J. Nicol said the company was projecting a 50% decline in capital expenditures this year to P80 billion. MPIC intends to scale down spending for discretionary projects such as those in hospitality, logistics and some water projects to conserve cash.

“On a group-wide basis, at this stage, I think it looks like we may be closer to sort of P80 billion funding as opposed to P160 billion,” he said.

Mr. Nicol noted the company intends to cut spending on overhead items and all things discretionary, as MPIC’s focus is “to keep everybody on the payroll” and “cut down in every other way that (it) can” in trying to survive the pandemic.

MPIC also said it is temporarily setting aside plans for regional expansion to focus on keeping its existing businesses afloat.

“I think at least for this second quarter, it is best to be financially prudent… There’s no energy looking at new projects or investing in new projects, especially abroad,” MPIC Chairman Manuel V. Pangilinan said in the briefing.

“We have to keep the businesses running and producing the relevant cash flows required by the business to move on beyond the quarantine and continue to be strong,” he added.

For the second quarter, Mr. Nicol said MPIC is “inevitably going to be very hard hit,” as the period would account for at least six weeks of ECQ as opposed to two weeks in the first quarter. “Hopefully we are going to be profitable, but it’s going to be much, much reduced from the first quarter,” he said.

Despite the expected surge in demand for health care services due to the COVID-19 pandemic, MPIC’s healthcare unit Metro Pacific Hospital Holdings, Inc. (MPHHI) said its profitability has been a challenge in current times.

“I think during the first two weeks of lockdown, revenues dropped as much as 50%. So it’s quite a big impact to the hospital business,” MPHHI President and Chief Executive Officer Augusto P. Palisoc, Jr. said.

He noted because of fear of the virus, most patients are opting to delay visits to the hospital, resulting in a decline in both the in-patient and out-patient business of MPHHI.

Mr. Palisoc said what the company intends to do is reconfigure its business and prepare for different scenarios by adopting new technologies and continuing to develop its laboratory capacity.

He also noted MPHHI is ready for any possible “second surge” of COVID-19 cases once the ECQ is lifted. He said the utilization of COVID-19 designated beds in MPHHI’s 16-hospital network is at about 36% at present. “In a way it is good because that mean…we would have a lot of capacity to be able to help,” Mr. Palisoc said.

Meanwhile, Mr. Pangilinan said he was amenable to an out-of-court settlement with the government over MPIC’s water concession, after President Rodrigo R. Duterte apologized to him earlier this week for their previous rift.

“We welcome that. I think it’s better to have a negotiated, bilateral kind of dialogue between (Maynilad Water Services, Inc.) and the government,” he said. However, he noted as of yesterday there is no course of action yet on the talks.

For Maynilad Chief Executive Officer Ramoncito S. Fernandez, what would be favorable for Maynilad is a “revised agreement that will be bankable at the end of the day.”

MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

Shares in MPIC at the stock exchange slid seven centavos or 2.46% to P2.78 each on Wednesday.