Diversified engineering and infrastructure conglomerate Megawide Construction Corp. (PSE: MWIDE) has reported a consolidated net income of PhP635.8 million growth for the first quarter of 2018, up by 16% from the PhP549 million in the same period last year.
The double-digit increase in net profit was driven by the continued robust growth of the airport business segment, which now contributes 62% to the consolidated net earnings. The construction business segment accounted for the 38% balance of the total.
Consolidated revenues reached PhP4.4 billion, with the construction business contributing 84% to total, while the airport accounted for the balance of 16%. First quarter revenues were 7% lower than the PhP4.8 billion in the comparable period in 2017 as a result of the cyclical nature of the construction business segment.
Megawide Chairman and CEO Edgar Saavedra remains positive about the year ahead. “We are optimistic about the company’s growth prospects in 2018 with the increasing contribution from our airport business and the expected pick up of our construction business towards the end of the year.”
The construction business segment posted PhP3.7 billion in revenues, 11% lower than the comparable period. This is due to projects in varying stages of construction in the order book and the scheduled start of construction for new projects booked towards the end of 2017 such as Hampton O&P, Cold Storage Caloocan, 8990 Ortigas, Ascott-DD Meridian Park, and Double Dragon Tower Phase 3.
Record New Contracts in the EPC Business
New contracts bagged during the first three months of the year amounted to PhP13.3 billion. This is 124% of the total new contracts booked in the full year of 2017. The majority of awarded projects are from the private sector with one big-ticket infrastructure project to construct the expansion of Clark International Airport. New projects also include Gateway Mall 2 Hotel, Golden Bay Tower, Taft East Gate and Space Ubelt.
According to Saavedra, “The push of the government’s Build, Build, Build program is a key revenue driver for our construction business. Given our competitive advantage as a Quadruple A contractor, a concession operator and a fully integrated engineering company, we are in the best position to participate in these projects.”
Continued Growth in the Airport Business
Meanwhile, airport operations posted Php646.1 million in revenues, 13% higher year-on-year from PhP569.7 million. This is on the back of an 11% growth in passenger volume, with international outperforming domestic in terms of passenger growth at 14% and 10%, respectively. Non-aero or commercial revenues, which contributed 33% to the total, grew by 18% to PhP212 million. Passenger Service Charge, representing 55% of airport revenues, increased by 11% to PhP357 million driven by the double-digit growth in passenger throughput. The remaining 12% accounts for aero-related revenues, which increased by 12% to PhP77 million.
“The solid performance of our airport segment will be supported by the completion of Terminal 2 in June of this year,” said Saavedra. “This will open more opportunities to steer this segment to even greater heights. Thriving tourism will also help boost growth as we position MCIA as the country’s main tourist hub with its strategic geographic location at the center of the Philippines.”
With the growth in revenues and drop in operating expenses, airport EBITDA grew by 23% to PhP480.5 million from PhP389.4 million at the end of the quarter. This led to an EBITDA margin of 74% from 68% last year. Net income jumped by 37% to PhP369.7 million compared to the PhP270.7 million posted in the same period last year. Net income margin improved to 57% from 48%.
Increase in Passenger Traffic at MCIA
At the end of the first quarter, MCIA handled 2.7 million passengers, with domestic passengers representing 65% and international passengers at 35%. Air traffic volume increased by 21%, with a 15% and 22% growth in international and domestic traffic respectively. The over-all increase in passenger traffic was brought about by new airlines and routes in both international and domestic sectors. For the first three months of 2018, MCIA added two international flights to Busan and Guangzhou and two domestic destinations to Ormoc and Catbalogan (via Biliran) serviced by Air Juan. To date, MCIA is serving 32 domestic and 22 international destinations, with eight local and 17 international airline partners.