DMCI group hikes 2017 capex to P57B

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After posting flat earnings in 2016

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CONSUNJI-LED conglomerate DMCI Holdings Inc. has ramped up its capital expenditure (capex) budget for 2017 to P57 billion from P40 billion in 2016 partly to support the new mine sites of subsidiary Semirara Mining and Power Corp. (SMPC).

Herbert Consunji, DMCI chief financial officer (CFO), said the group is allotting P57 billion capex for 2017 as Semirara moves to operate new mines in Narra and Molave, which are around its current Panian mine in Antique.

Of the total capex for this year, P46.5 billion will go to DMCI Homes for the launching of its planned developments, followed by SMPC with P8.44 billion, DMCI Power with P1.33 billion, construction company DM Consunji Inc. with P570 million, and nickel miner DMCI Mining with P100 million.

DMCI said it expects single-digit growth in net income this year after a flattish performance in 2016.

“It was very disappointing last year. But next year will be a little better than last year,” the CFO said on Thursday.

DMCI Holdings’ consolidated net income last year fell 5 percent to P12.2 billion from P12.8 billion in 2015, weighed down by the sharp drop in earnings of its nickel mining unit, the lower contributions from the property and water businesses, and other one-off items.

DMCI booked a P530 million one-time gain from the sale of its 25.11 percent share in Private Infra Dev Corp. (PIDC) in 2015 and a one-time gain of P111 million from the partial sale of Subic Water in 2016.

Excluding the one-off items, the company’s core net income was P12.1 billion in 2016, little changed from the P12.3 billion profit recorded in 2015.

“The double-digit growth of our energy and construction businesses were offset by the sharp drop in profitability of DMCI Homes, DMCI Mining and Maynilad,” DMCI Holdings Chairman and President Isidro A. Consunji said.

Semirara Mining posted an all-time high consolidated net income of P12 billion in 2016 due to higher coal and power sales, translating to a 43-percent hike in income contribution to DMCI Holdings at P6.9 billion.

Net income contributions from DMCI Homes and Maynilad fell by 46 percent and 19 percent, respectively, to a
combined P1.9 billion.

D.M. Consunji Inc. registered strong earnings at P938 million, up 49 percent from 2015, on the strong performance of its construction segments.

Net income of off-grid supplier DMCI Power Corp. rose 11 percent to P424 million on higher electricity sales in Masbate and Palawan and the full-year operations of its 15.6-megawatt (MW) bunker-fired plant in Oriental Mindoro.

The suspension of DMCI Mining’s nickel assets, combined with receding nickel prices and sluggish demand for lower-grade nickel, pulled down its net profit to P65 million last year from P501 million in 2015.

The Department of the Environment and Natural Resources (DENR) ordered the suspension of Berong Nickel Corp. in June because of the alleged discoloration of Barangay Berong’s river system and tributaries. The following month, another DMCI Mining unit Zambales, Diversified Metals Corp. was served a suspension order for alleged “social issues.”

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