Posts 15% increase in 9-mth profit
METRO Pacific Investments Corp. (MPIC), the infrastructure vehicle of business tycoon Manuel Pangilinan, on Thursday bared plans to boost capital spending in 2015 to about P50 billion.
The company made the statement after it reported a 15-percent increase in core net income for the nine months to September.
Jose Ma. Lim, MPIC president and chief executive officer, said the company is increasing its capital expenditures (capex) next year by 20 percent, or “close to P50 billion,” from the P35 billion it set aside this year.
“It would be closer to P50 billion capex for the MPIC group next year, including the LRT Line1 Extension Project,” Lim told reporters after the firm’s analysts briefing.
Part of the 20 percent increase in capex will fund the P10 billion LRT 1 extension project, which will be operated and maintained under a 32-year concession agreement between the government and the Light Rail Manila Corp. (LRMC).
LRMC is a joint venture company of MPIC’s Metro Pacific Light Rail Corp. (MPLRC), Ayala Corp’s AC Infrastructure Holdings Corp. (AC Infra), and the Philippine Investment Alliance for Infrastructure’s Macquarie Infrastructure Holdings (Philippines) PTE Ltd. (MIHPL).
The P10 billion capex for the LRT 1 extension will be used to kick off construction of the rail project in September 2015.
Lim said the 2015 group-wide capex — excluding the allotment for the LRT 1 extension project — is about the same as the P35 billion capex this year, comprising P18 billion for Maynilad Water Services Inc., P3 billion for Metro Pacific Tollways Corp. (MPTC), P11 billion for Manila Electric Company (Meralco), and P2 billion for the MPIC Hospital Group.
Lim said a holding company, Light Rail Manila Holdings, will be in charge of the LRT 1 extension project, adding that the “LRMC will be the operating company, together with AC Infra and MIHPL.”
For the first nine months of the year, MPIC said its core net income rose 15 percent to P6.5 billion from last year’s P5.6 billion.
The increase was due to strong sales and volumes sold by MPTC, Maynilad, Meralco and the Hospital Group, as well as strong traffic growth and increased shareholdings in Manila North Tollways Corp.
“All of our operating companies have again reported strong profitability in the period. This reflects our unblinking focus on operational efficiencies but at the cost of years of high capital expenditures,” Lim said.
“However, a number of our businesses are facing delayed, if not overdue, tariff adjustments, particularly our toll roads. For example, we are close to reaching a point where continued spending on road construction without resolving the tariff issues would be inconsistent with our fiduciary responsibilities to shareholders,” he added.
Net operating income contributions of business segments were: 42 percent from Maynilad; 32 percent from Meralco; 21 percent from toll road units MPTC and MNTC; and 5 percent from the Hospital Group.
Incorporated in 2006, MPIC holds Pangilinan’s investments in water utilities (Maynilad), toll roads (MNTC and MPTC), electricity distribution (Meralco) and healthcare services (MPIC Hospital Group). MPIC is 55.8-percent owned by Metro Pacific Holdings, Inc.