Manila—(PHStocks)—Metro Pacific Investments Corp. (MPIC, PSE: MPI) has reported a 17% rise in consolidated core net income to ₱12.1 billion for the year ended 31st December 2016 from ₱10.3 billion in 2015 on the back of strong growth at all its operations.
Core Net Income was lifted by: (i) robust traffic growth on each of the roads held by Metro Pacific Tollways Corporation (“MPTC”); (ii) an expanded power portfolio through increased investment in Beacon Electric Asset Holdings Inc. (“Beacon Electric”) and Global Business Power Corporation (“Global Power”); (iii) continuing growth in the Hospital Group; (iv) first full-year contribution from Light Rail Manila Corporation (“LRMC”); and (v) a profitable entry into the Logistics sector.
In terms of contribution to the Company’s net operating income: Power (distribution and generation) accounted for ₱7.2 billion or 48% of the aggregate contribution; Water (distribution, production and sewerage treatment) contributed ₱3.6 billion or 24% of the total; Tollroads contributed ₱3.5 billion or 23% of the total; the Hospital Group contributed ₱589 million or 4% of the total; and the Rail, Logistics and Systems Group contributed ₱234 million or 1% of the total.
Consolidated Reported Net Income attributable to owners of the parent company rose 20% to ₱11.5 billion in 2016 from ₱9.6 billion in 2015. Non-recurring expense amounted to ₱650 million substantially comprising project expenses and our share in the impairment loss recognized by MERALCO on its investment in PacificLight Power Pte Ltd (“PacificLight”), a Singapore-based power generator and electricity retailer.
“MPIC’s group-wide capital expenditure in 2016 was ₱40.5 billion, all of it contributing to the fabric of our nation and enhancing our capacity to serve the public. In addition, we have made an aggregate ₱32.7 billion of investments in our existing businesses and in expanding in to new areas in the course of the year. Our continuing earnings growth reflects significant volume increases for all our businesses, supported by our capital expenditures, together with intense focus on operational efficiencies. In light of this strong performance, your Board of Directors today declared a final dividend for 2016 of 6.8 centavos per share which is 11% higher than the final dividend in 2015. The dividend payout ratio for 2016 is 25% of Core Income per share,” said Jose Ma. K. Lim, President and CEO of MPIC.
“Our shareholders are legitimately concerned about the continuing delay in resolving various tariff issues left over from the previous administration. Discussions with the new Administration continue and there is agreement that our capital expenditures are essential and that contracts will be honored. However, I have as yet no timetable for resolution of these issues although the matter looks promising,” he said.
Lim said he expected continued strong volume growth this year but it was too early to provide earnings guidance for the full year 2017.
The record date for the final dividend is 30th March 2017. Payment date is 26 April 2017.
In May last year MPIC deepened its participation in the Philippine power sector with an increase in MPIC’s effective ownership in MERALCO (PSE: MER) through the acquisition of 25% of Beacon Electric and Beacon Electric’s acquisition of Global Power. The increase in MPIC’s effective ownership in MERALCO, lower debt at Beacon Electric and the earnings from Global Power combined to increase the power business contribution to MPIC for the year by 59% to ₱7.2 billion.
MPIC is now ideally positioned to continue its development of power related services and investments in the Philippines with its combination of distribution, generation and retail electricity sales across Luzon and the Visayas.
MERALCO’s Core Net Income for 2016 rose 4% to ₱19.6 billion mainly due to an 8% increase in electricity consumption and higher interest income. The benefit from increased volume was partially offset by lower distribution tariffs, the absence of the generation and transmission recoveries recorded in 2015 and losses at PacificLight. The growth in energy sales was driven by strong demand from all customer classes, particularly residential, warmer weather during the first four months of the year and high electricity consumption during the national elections in May.
Notwithstanding the increase in energy sales, total revenues declined slightly to ₱257.2 billion primarily due to lower pass-through generation and other charges owing to significantly lower fuel prices, higher availability of MERALCO’s contracted power plants and competitively negotiated Power Supply Agreements (“PSA”). This is good for consumers.
MERALCO spent ₱11.4 billion on capex in 2016 to address critical loading of existing facilities and to accommodate growth in demand and customer connections. MERALCO surpassed the previous year’s operating performance for system loss achieving a record best of 6.4% at the end of December 2016, 2.1 percentage points lower than the regulatory cap set by the ERC of 8.5%. This continuous effort to reduce system loss translates to ₱26.9 billion cumulative savings to consumers since 2008.
MERALCO through MERALCO PowerGen Corporation (“MGen”) continues to increase the scope of its power projects:
- Redondo Peninsula Energy, Inc. (RP Energy), a joint venture of MGen, Therma Luzon, Inc., and Taiwan Cogeneration International Corporation, is awaiting ERC approval of the PSA with MERALCO covering a substantial portion of its first 300 MW capacity coal-fired power plant. The power plant site is ready for construction activities and expected completion by 2020.
- San Buenaventura Power Limited (SBPL), a joint venture between MGen and Thailand’s New Growth B.V., is developing a 455 MW (net) supercritical coal-fired power plant in Mauban, Quezon. Construction is proceeding as scheduled with commercial operation due in the first half of 2019. Its full capacity is contracted under an ERC approved PSA.
- Atimonan One Energy Corporation is awaiting review and approval of its PSA from the ERC for it to issue a Notice to Proceed for the Engineering, Procurement and Construction (EPC) for its 2×600 MW coal-fired plant in Atimonan, Quezon. The PSA for the entire capacity was contracted by MERALCO.
- MGen has signed joint venture agreements for the St. Raphael 2×350 MW (net) pulverized coal-fired plant with Semirara Mining and Power Corporation and the 4×132 MW Mariveles Power Generation Corporation coal-fired plant with San Miguel Energy Corporation. These ventures are supported by Power Purchase Agreements from MERALCO which are currently pending ERC approval.
The full text of MERALCO’s Earnings Press Release issued on 27th February 2017 is available at www.meralco.com.ph.
Global Power, in which MPIC holds an effective stake of 47.8%, is the leading power supplier in the Visayas region and Mindoro Island. In 2016, Global Power increased its combined gross maximum capacity by 150 MW to 854 MW comprising 846.5 MW of power supplied to the Visayas grid and 7.5 MW of power supplied in Mindoro.
The new 150 MW coal-fired circulating fluidized bed (“CFB”) plant in Panay is currently undergoing final acceptance. The CFB technology is considered the cleanest available coal plant technology for its size. This expansion project underscores Global Power’s commitment to support economic growth in the Visayas region and the government’s quest for inclusive growth in all areas of the Philippines.
In Luzon, Global Power’s main development project is a 670 MW super critical coal fired plant in Luna, La Union. The EPC selection process is continuing. This project is supported by a 600 MW Power Supply Agreement with MERALCO awaiting ERC approval which itself rests on obtaining an Environmental Clearance Certificate among other steps.
The volume of power sold in 2016 amounted to 3,646 GWH, at par with last year’s due to grid capacity constraints in the Visayas preventing full dispatch. Global Power recorded Core Net Income for 2016 of ₱2.8 billion. Since acquisition, Global Power’s contribution to the core income of MPIC amounted to ₱489 million, net of acquisition financing costs.
MPIC’s water business comprises its investments in Maynilad, the biggest water utility in the Philippines, and MetroPac Water Investments Corp. (MWIC), the company’s unit focused on business development outside Metro Manila. Our water segment’s contribution to Core Net Income amounted to ₱3.6 billion in 2016 attributable substantially to Maynilad.