Semirara drags DMCI Holdings’ net income lower in Q3

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By Arra B. Francia, Reporter

CONSUNJI-LED DMCI Holdings, Inc. reported a 44% drop in earnings for the third quarter of 2018, weighed down by the weakness of its coal energy business that makes up around half of its portfolio.

The diversified engineering conglomerate posted a consolidated net income of P2.3 billion from July to September, versus the P4.1 billion it realized in the same period a year ago.

This brought the listed company’s nine-month consolidated profit to P11.5 billion, 2% lower than the P11.7 billion booked last year. Without one-time gains worth P715 million from the sale of an undeveloped lot by its housing unit and other one-time costs, DMCI Holdings’ core profit was down by 8% to P10.8 billion.

Revenues meanwhile rose by 3% to P60 billion during the nine-month period.

“Semirara (Mining and Power Corp.) is down, it’s about 50% of the portfolio that’s why it spilled over to the whole group. But the other drivers are positive… all drivers are double-digit growth,” DMCI Holdings Vice-President and Senior Finance Officer Brian T. Lim told reporters in a press briefing in Taguig City late Monday.




Nine-month income contributions from SMPC fell 22% year-on-year to P5.1 billion due to heavy rains in July and August, as well as the seven-month shutdown of Southwest Luzon Power Generation Corporation (SLPGC) Unit 1, way beyond its programmed outage of around 45 days.

DMCI Holdings Chief Finance Officer Herbert M. Consunji noted that the power plant has business interruption insurance, which covers the loss of business income due to damage to the insured asset, amounting to P1 billion.

“We have collected around P300 million from that P1 billion, but what Semirara wants is to recognize the insurance when the whole of it has been paid within the year,” Mr. Consunji said during the briefing.

Mr. Consunji expects Semirara to recover from business interruptions in the fourth quarter.

Meanwhile, DMCI Homes delivered a 29% increase in income contribution to the parent to P3.4 billion. The property developer recognized a one-time gain on the sale of an undeveloped lot in Quezon City during the period. It also benefited from the 7% increase in reservation sales.

The company booked P1.5 billion from net income contributions form affiliate Maynilad Water Services, Inc., 11% higher year-on-year, due to a 2.8% uptick in bulled volume, 2.8% tariff adjustment due to inflation, and an improved consumer mix.

The construction arm through DM Consunji, Inc. saw its net income share grow by 12% to P952 million. The unit recorded higher accomplishment in building projects and further realized variation orders from projects close to completion.

DMCI Power Corp. provided P337 million, higher than 4% from last year’s P324 million. The off-grid energy business logged a 25% increase in electricity sales volume, but was dragged by lower-than-expected provisional tariff for its Aborlan bunker plant in Palawan.

For DMCI Mining Corp., net income contribution rose by 14% to P133 million, after shipping 482,762 wet metric tons of higher grade nickel ore from its old stockpile.

Sought for comment, Regina Capital Development Corp. Equities Analyst Rens V. Cruz II called DMCI Holdings’ third quarter figures “underwhelming,” but noted that full-year performance remains on track.

“(W)eakness emanated mostly from cyclical considerations. Heavy downpour in 3Q led to weaker SCC (Semirara’s ticker symbol), nickel mining earnings, while (DMCI) Homes registered a one-off in 9M17. These are mostly factors that are not expected to spill over significantly in the coming periods,” Mr. Cruz said in a mobile message.