MPIC to scale down capex by half

MANILA, Philippines — Metro Pacific Investments Corp. (MPIC) expects to scale down its capital expenditures by half this year as it grapples with the negative impact of the coronavirus disease 2019 or COVID-19 pandemic.

Its first quarter performance already took a hit with core earnings declining by six percent to P3.4 billion owing largely to the economic contraction stemming from the government’s measures to contain the spread of COVID-19 through a Luzon-wide enhanced community quarantine in the middle of March.

This is the company’s first ever year on year decline in quarterly earnings.

MPIC plans to reduce capex to around P80 billion from P160 billion originally.

“As it stands now, we will cut back on discretionary projects,” MPIC chief financial officer David Nicol said in an online briefing yesterday.

The quarantine has reduced toll road traffic, suspended rail services and decreased commercial and industrial demand for water and power, resulting in a decrease in contribution from operations of five percent.

MPIC’s net income plunged to P1.9 billion from P3.5 billion a year earlier due to  the provisioning in full of the carrying value of Meralco’s investment in Pacific Light Power (PLP), a gas-fired power plant in Singapore.

MPIC recorded non-recurring expenses of P118 million in 2018 primarily due to refinancing and  share issuance costs plus various project expenses.

Moving forward, MPIC president and CEO Jose Lim said the company needs to preserve its  cash and would hold off some infrastructure projects.

“MPIC itself is well funded due to the P30.1 billion sell down of our interest in our hospitals business at the end of 2019. We moved to suspend our previously announced  share buyback and other discretionary projects,” Lim said.

“As earlier reported, Maynilad is currently  unable to pay a dividend pending the outcome of the concession agreement review, and  as a result of  the  enhanced community quarantine and other consequences of  the  COVID-19  outbreak, we may  expect lower dividends from our power and toll roads businesses for 2020,” he added.

Power accounted for  P2.87 billion or 62 percent of net operating income, tollroads contributed P0.92 billion or 20 percent and water  P0.86 billion or 18 percent.

Moving forward, MPIC chairman Manuel V. Pangilinan said while  the company is in the middle of a major health catastrophe, it would be able to survive because of the strength of its existing portfolio which includes water and power.

He said the company would also be revisiting its portfolio to shift to the less regulated businesses and to future proof the group and hopefully prepare it for the next crisis.

He expects second quarter results to also be lower than year-ago figures.

“That said, due to the prudent financial management of MPIC and of our  major operating companies we are well placed to pull through this crisis, and in fact,  likely maintain our dividends to shareholders,” Pangilinan said.