Meralco 9-mth core net income down 5%

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MANILA Electric Co. (Meralco) said its unaudited consolidated core net income in the first nine months of the year reached to P15.0 billion, down 5 percent from P15.8 billion a year earlier.

Net income totaled P15.7 billion, down 3 percent in the comparable period. Core earnings per share stood at P13.28 and the reported earnings per share at P13.91, Meralco senior vice president and head of Customer Retail Services & Corporate Communications, Al Panlilio, said in a media briefing on Monday.

The year-to-date energy sales volume grew by 9 percent, significantly stronger compared with the growth forecast of almost 4 percent prior to the start of 2016. Total year-to-date consolidated energy sales volume was at 30,103 Gigawatt hours (GWh), Panlilio said.

Electric revenues amounted to P189.1 billion, lower by P2.4 billion or 1 percent, due largely to significantly lower fuel prices.


Panlilio noted for the first nine months of 2016, the average coal price was at a low of $54.36 per MT, while oil averaged at an all- time low of $38.98 per barrel (Dubai crude). Malampaya gas was at an average of $6.1376 per gigajoules.

These drove the generation charge drop to P3.721 per kWh in June 2016, the lowest in 12 years.
Average overall electricity rate for the nine-month period was at P7.56 per kWh, down 11 percent.

The structure of the Power Supply Agreements (PSAs) negotiated by Meralco contributed to the lower cost.

Prior to the PSAs, Meralco procured its electricity under Transition Supply Contracts (TSCs) with the National Power Corporation (NPC), the terms of which included foreign exchange adjustment and “take-or-pay” provisions.

Betty Siy-Yap, Meralco senior vice president and chief finance officer, said the consolidated core EBITDA (earnings before interest, tax, depreciation and amortization) amounted to P26.2 billion, equivalent to a core EBITDA margin of 13 percent on consolidated revenues.

“Consolidated revenues in the first nine months of 2016 were P195.2 billion compared with P197 billion in 2015. Electric revenues amounted to P189.1 billion, lower by P2.4 billion or 1 percent over the comparative period due largely to the significantly lower fuel prices which has affected the major component which is passed through generation costs,” she said.

“For the first nine months, we saw average fuel prices all for coal, gas and oil at record low and this drove Meralco’s generation charge. We veered away from regular take or pay provisions we negotiated very well on our PSAs,” she added.

Non-electric revenues rose to P6 billion, almost 9% higher compared with 2015. As of September 30, these represented over 3 percent of total revenues, Siy-Yap said.

The consolidated core net income of P15.0 billion in 2016 excluded the gain on sale by the company of an 8 percent interest in Global Business Power Corporation to JG Summit Holdings Inc., and foreign exchange adjustments on dollar-denominated funds. However, it included the higher interest yields of P1.5 billion realized during the nine months ended September 30, 43 percent higher than 2015,” she added.

“With firm number of 2016, we are confident that Meralco can achieve a consolidated core net income 19 billion slightly ahead of 2015,” Manuel V. Pangilinan, chairman of Meralco said.

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