Meralco profit up 2% to P9.6 B in H1

MANILA, Philippines - Manila Electric Co. (Meralco), the country’s biggest power distributor, said its reported consolidated net income went up two percent to P9.6 billion in the first half of the year compared to the same period a year ago.

In a briefing yesterday, Meralco president Oscar Reyes said higher electricity sales, which grew three percent year-on-year to 17,299 gigawatt-hours, was the main driver of profit.

“Industrial accounts were led by the food and beverage, basic non-mineral and steel manufacturing sectors. Commercial volumes continued to be buoyed by the brisk real estate and trade activities, even as hotels and restaurants posted declines,” Meralco said in its financial report.

On the other hand, residential volume went down 0.5 percent due to average cooler temperatures in the first half of the year, slightly higher inflation and the increasing adoption by consumers of energy measures and energy efficient appliances,” the company said.

Consolidated revenues declined to P132.2 billion from P141.7 billion in 2013.

Meralco attributed the lower consolidated revenues in 2014 to the P9.3 billion downward adjustment of pass-through charges on its purchases from the Wholesale Electricity Spot Market (WESM), the  trading floor for electricity, as ordered by the Energy Regulatory Commission (ERC).

Debt repayments and financing costs paid in the first half of 2014 amounted to P11.9 billion.

 “All of Meralco’s debts are denominated in Philippines pesos with no significant maturities until 2020. Financing cost, excluding prepayment surcharge for first six months of 2014 was P766 million, flattish compared with 2013 despite the slightly higher debt levels through most of the six months of 2014,” Meralco said in its report.

For the rest of the year, Reyes said it was too early to say how much would be the company’s income as the distributor is still assessing the impact of Typhoon Glenda.

Meralco has incurred damage of about P310 million from the recent calamity.

 “We will withhold (profit) guidance until the third quarter because of Glenda damage,” Reyes said.

He said the expenses incurred as a result of the typhoon will affect Meralco’s second half earnings.

 “We remain hopeful that 2014 results will still reflect an improvement over 2013 despite the impact of Glenda,” Reyes said.

In a separate statement, Meralco chairman Manuel V. Pangilinan said the lack of reliable generating capacity to meet the growing demand remains a major challenge to power supply and pricing stability, particularly over the next two years.

 “The absence of any new capacity built for more than 10 years, except for GN Power’s 600 MW coal-fired power plant in Mariveles, Bataan, will need to be addressed by accelerated execution of committed and planned base-load and mid-merit power plant projects,” Pangilinan said.