Manila Water earnings drop on supply constraints

MANILA, Philippines — The recent supply shortage in the East Zone continued to take a toll on Ayala-led Manila Water Co. Inc. as its net income declined by 11 percent to P4.4 billion amid higher costs and expenses coupled with government penalties.

In a regulatory filing, the water firm attributed the lower bottomline to the impact of the water supply shortage despite revenues improving 10 percent to P16.1 billion.

Revenues grew due to the higher contribution of the domestic businesses outside the east zone.

The firm’s operating expenses also surged 18 percent to P7 billion, a major factor of which was the provision of financial penalty imposed by the Metropolitan Waterworks and Sewerage System and the additional service recovery and operations augmentation costs in relation to the water supply shortage.

In April, the MWSS board decided to fine the east zone concessionaire P534.05 million and an additional P600 million which will be used for the development of  a new water supply source.

Manila Water violated the provision of the concession agreement which requires 24/7 water supply to its consumers.

Total billed volume still increased by eight percent to 875.89 million cubic meters amid lower water supply and service availability.

Billed volume in Manila declined by two percent and average consumption by four percent, a direct result of the lack of available raw water supply for distribution. This decline, coupled with the one-time bill waiver program, had affected topline.

Outside the Manila concession, Manila Water Philippine Ventures climbed 126 percent to P301 million led by key subsidiaries Laguna Water, Estate Water, and Boracay Water.

Laguna Water grew its earnings by 85 percent to P290 million due to improved average tariff.

For Estate Water, positive performance was bolstered by higher supervision fees for new projects, as well as an increase in billed volume through the takeover of new residential and mixed-use estates.

For Boracay Water, net income grew 137 percent to P73 million due to the higher number of tourist arrivals with the reopening of the island.

Manila Water Asia Pacific, which houses Manila Water’s international investments in the region, saw an eight percent increase in earnings to P552 million, mainly driven by the equity share of East Water in Thailand.

This despite challenges encountered by subsidiary operations in Vietnam, which posted lower income contribution due to higher regulatory and operating costs, even as billed volume remained relatively stable.