Core net income in H1 P4.6B, up 15%
METRO Pacific Investment Corp. (MPIC), the conglomerate headed by businessman Manny Pangilinan, is confident of meeting its P8-billion core net income target for 2014 following the strong earnings performance for the first half.
“With regard to full-year guidance, we anticipate continued volume growth for the rest of the year that would enable us to achieve P8 billion core net income for 2014 despite ongoing uncertainties over regulatory stability for water, road and power prices,” said Jose Maria K. Lim, MPIC president and CEO.
MPIC’s water subsidiary Maynilad is facing arbitration over rate-setting for the regulatory period beginning January 1, 2013, while power unit Manila Electric Company (Meralco) is facing challenges over higher charges imposed by power plant operators.
Meanwhile, its toll road business through Metro Pacific Tollways Corp. (MPTC) is experiencing delays in scheduled toll adjustments with Subic Clark Tarlac Expressway (SCTEX) which is now four years pending.
Despite these challenges, Lim said the growth drivers for the whole year will be its power and water segments.
MPIC said that for the first half, core net income reached P4.6 billion, 15 percent higher than the P3.9 billion recorded a year earlier.
It said income growth was driven by healthy profits at Meralco, its tollways business, Maynilad and the hospital group. Meralco posted core net income of P9.9 billion in the first half, tollways P1.2 billion, Maynilad P4.5 billion, and the hospital group P458 million.
“All our businesses achieved strong growth in profitability, helped in large measure by debt refinancings last year,” Lim said.
To achieve its targets, the MPIC board of directors approved to advance a power project in Tagum, Davao del Norte. The waste-to-energy converting facility to be constructed “in the next three months” will be 70-percent held by MPIC and 30 percent by Korea-based energy firm Global Green International.
Manny Pangilinan, MPIC chairman, said Global Green will provide the pyrolysis technology that will convert wastes into energy. Pyrolysis refers to the thermochemical decomposition of organic material at elevated temperatures.
The facility will cost P600 million to P700 million and will commence construction six months from November this year to May next year.
Lim said the power plant will initially produce 2 megawatts (MW) of power and 12,000 liters of biodiesel fuel a day to supply neighborhoods in Davao alone. After the initial test phase, full blown production capacity is seen to go up to 6 MW and 12,000 liters per day.
He added that the waste-to-power facility will source wastes from a landfill in Davao, and the company is now looking for locations and other landfill sites where they can source wastes to convert into energy “if the venture becomes successful.”
Both Lim and Pangilinan said that by starting up the Tagum plant, the company is targeting production capacity of 300 MW and 500,000 biodiesel liters per day for the power sector.
Lim said this is a solution “to the landfill problem of the country, and also a potential revenue source.”
“The country needs more capacity. It will help, especially in the local level. If it works in Korea [and Japan], it can also help us here. It will help the social life of the people,” Pangilinan said.
Incorporated in 2006, MPIC holds Pangilinan’s investments in water utilities, toll roads, electricity distribution and healthcare services. MPIC is 55.8 percent-owned by Metro Pacific Holdings Inc. KRISTYN NIKA M. LAZO