Meralco core earnings down 9%

MANILA, Philippines — Manila Electric Co. (Meralco) saw a nine percent drop in core net income last year to P21.7 billion on lower sales largely due to the impact of the COVID-19 imposed lockdowns and typhoons in the latter part of the year.

In a virtual briefing yesterday, Meralco CFO Betty Siy-Yap said this was due to the “combined effects of the Taal Volcano eruption, COVID-19, and the three major typhoons that hit the franchise area.”

Reported net income plunged by 30 percent to P16.3 billion due to the “impairment loss Meralco took in its investment in Pacific Light,” Siy-Yap said.

On a quarterly basis, Meralco reported higher core net income in the first quarter year-on-year as “the effects of the pandemic were still minimal.”

It was in the second quarter when the power distributor registered a 20 percent slide in core net income as the COVID-19 lockdown was implemented mid-March.

“(This is) reflecting the full effect of the pandemic as energy sales volume drastically dropped with the imposition of lockdown. We recognized a P1.4 billion provision for doubtful account during that period given the extended payment terms and suspension of disconnection activities,” Siy-Yap said.

Meralco, along with other power ditributors, was directed to provide payment extensions on bills falling within the enhanced community quarantine (ECQ) imposed by the government.

By the third quarter, Meralco registered a six percent rise in core net income versus the second quarter due to higher volumes as quarantine restrictions eased, Siy-Yap said.

But on a year-on-year basis, it was still six percent lower.

It was only in the fourth quarter when core net income rose from P5.38 billion to P5.98 billion due to “continuous recovery of volumes, augmented by lower operating expenses, higher contribution from Meralco Power Gen,” Siy-Yap said.

Gross revenues rose 14 percent to P275.3 billion, 14 percent lower than 2019, while volume dropped by seven percent to 43,572 gigawatt-hours (GWh).

Total electricity revenues declined by 14 percent to P267.9 billion, reflecting the reduction in purchased power costs, while Meralco’s distribution charge per kWh remained unchanged, Siy-Yap said.

For the year, Meralco’s customer base grew four percent to a total of 7.1 million customer accounts for a net 249,000 new customer accounts.

For this year, Meralco chairman Manuel V. Pangilinan said January operating trends, including energy sold to commercial customers, started to regain traction.

“I am of the view that we need to jumpstart the economy sooner rather than later. The planned nationwide rollout of the COVID-19 vaccines is the first and most critical step towards alleviating fear, which is a prime deterrent to mobility. To this end, we have joined others in the private sector in procuring vaccines not only for Meralco, but also for the broader MVP Group,” Pangilinan said.

“In the meantime, we have not lost sight of our role in providing reliable power to our customers, which will also underpin our economic recovery. In addition, we are cognizant of the need to future-proof our business by focusing on sustainability, and by digitalizing certain of our processes. We are increasing resources allocated to clean technologies, instituting a stronger plan for the reduction of greenhouse gas emissions and setting up science-based, measurable targets as our guidance,” he said.