Megawide shifts focus to public infra projects as earnings recover

MANILA, Philippines — Megawide Construction Corp. swung back into profit in the first quarter, with the company now shifting its attention to state-backed infrastructure projects after the pandemic weighed on private investments.

In a disclosure to the stock exchange, the listed builder reported a net income of P2.8 million in the first three months of the year. That was a massive 98.6% year-on-year decline in Megawide’s bottom-line but, for the company, it was a signal of its “return to a healthier performance” after ending 2020 with a net loss of P398.1 million.

“While the results still lagged from the previous year, the Company was able to turn in a positive bottom-line due to aggressive cost rationalization and overhead management, resulting in lower operating expenses,” Megawide said.

Investors welcomed the news. On Monday, shares in Megawide gained 1.82% to close at P6.16 each, bucking a 0.55% slump in the main index.

Like several businesses, 2020 was a bad year for Megawide. Apart from incurring losses due to the pandemic, the company also lost its original proponent status (OPS) for the rehabilitation project of the Ninoy Aquino International Airport after its first proposal worth P109-billion was deemed too big for the firm to absorb.

Financial results showed the company recorded revenues amounting to P3.72 billion in the first quarter, down 25% on an annual basis. About 92% of total revenues during the period came from Megawide’s construction business, which contributed P3.42 billion.

Offsetting the revenue slump was an 8% decline in operating expenses, partly due to lower-than-normal operations as a result of the pandemic. Moving forward, the company said it will pivot to public infrastructure projects after lockdowns hampered private sector projects.

Specifically, Megawide said it will participate in the upcoming bidding for two state-backed projects this year: the Metro Manila Subway System and North-South Commuter Railway - South Line.

“We hope to offer our expertise and wide array of solutions in this fast-growing infrastructure space, whether as an engineering contractor, a service or product provider, or both, to maximize our exposure and generate more business,” Edgar Saavedra, company chairman and chief executive, said.

“We will also continue to be active in the residential and commercial and industrial segments to further expand our presence once the economy recovers,” Saavedra added.