DMCI warns of weak 2016 bottom line after flat Q1

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CONGLOMERATE DMCI Holdings Inc. on Wednesday said its net profit for the first three months of the year stood at P3 billion, flat from last year.

The company said it expects “more or less” flat earnings for the entire year.

In a press briefing, DMCI Chairman and President Isidro Consunji said they foresee some weakness in net income for the year because of the expiration of the income tax holidays granted to its water unit Maynilad Water Services Inc. as well as lower production from its mining unit and weaker prices of nickel ore.

DMCI said its net profit of P3 billion in the first quarter already includes the P111 million earnings from a one-time gain from the partial sale of its 10 percent share in Subic Water and Sewerage Co.


Excluding this one-time gain, core net income stood at P2.93 billion, 4 percent lower than the P3.06 billion realized during the same period last year.

“We expect a weak bottom line this year because of a confluence of factors. Declining commodity prices, tapering electricity rates, and most of all, the termination of Maynilad’s six-year tax exemption will drag down net income contributions from our businesses,” Consunji said.

Reduced profitability of its two major income contributors accounted for the flattish growth of the Consunji’s holding company, the top executive said.

Net income contributions from DMCI Homes fell 21 percent to P665 million from P845 million a year ago because of higher costs of materials and labor, paid commissions and documentary stamps from its bond issuance.

Maynilad, the water concessionaire for the west zone of Metro Manila, posted income contribution of P403 million, down 24 percent from last year’s P527 million following the expiration of its income tax holiday in December 2015.

Seasonality in the shipping window and lower shipment volume because of the depressed nickel ore prices led to a wider loss for DMCI Mining Corp.

“From a first quarter net loss of P24 million in 2015, the company’s earnings further receded more than three times to P100 million during the same period this year,” DMCI Holdings said in a disclosure to the Philippine Stock Exchange (PSE).

The power and construction businesses fared better during the first quarter reporting period after Semirara Mining and Power Corp. contributed P1.6 billion, a 16 percent improvement from the P1.4 billion recorded in the first three months of 2015.

Off-grid supplier DMCI Power Corp. delivered P98 million, a 32 percent increase from P74 million last year.

Higher electricity sales in Oriental Mindoro, Palawan and Masbate and the commercial operations of a 3×1.23 megawatt plant in Sultan Kudarat beginning January accounted for the income growth.

Despite a 12 percent drop in revenue, income contribution from DM Consunji Inc., the company’s construction arm, rose 3 percent to P197 million from P191 million, as total construction costs fell at a faster pace, the company said.

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