MPIC profit surges 27% in H1

MANILA, Philippines - Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) expects its core net income to hit P10 billion by yearend after profits surged 27 percent in the first half of the year.

MPIC said yesterday it was able to hurdle regulatory challenges once more in the first six months of 2015 as core net income reached P5.9 billion, up from P4.6 billion recorded in the same period last year behind the strong growth of its four main businesses.

“The strong results for the first half reflect continuing improvements in service levels as well as efficiency and financing gains for our operating companies,” MPIC chairman Manuel V. Pangilinan said.

Despite the robust first half performance, Pangilinan has placed the company’s core earnings guidance for 2015 at a modest P10 billion taking into consideration uncertainties on tariff increases.

“Unfortunately, increasing regulatory risks-of which tariff adjustments are the principal–but by no means the only component may eventually degrade the level of services – a prospect we ourselves wish to avoid. Amongst others, due to continuing uncertainty on various tariff increases, we are guiding the core earnings to P10 billion for the full year,’’ he said.

MPIC’s core earnings year-end target is an 18 percent year-on-year increase from its 2014 earnings of P8.5 billion.

MPIC chief financial officer David Nicol said the company’s first half results “were higher than expected” but were “lower than they should be given the huge amount of capital invested and the huge amount of operating progress that has been made.”

“It’s because we’re not getting the tariffs that should be delivered to us,” he said.

For its year-end core earnings, Nicol said MPIC’s target should have been P12 billion instead of P10 billion if not for the tariff challenges in its water and tollways businesses.

“My estimate, roughly P2 billion a year in net income has been foregone because of the accumulated drag in tariff progression. It’s a significant number indeed,” he said.

As of the first six months of the year, MPIC attributed the double-digit rise in its core net income to the strong traffic hike on all the roads held by Metro Pacific Tollways Corp., growth at Maynilad Water Services, Inc. due to higher billed volume, increased effective shareholding in Manila Electric Co., and continuous growth in the hospital group.

In terms of contribution, MPIC said Meralco accounted for P2.9 billion or 43 percent of total net operating income, followed by Maynilad which contributed P2.4 billion or 35 percent.