For the first time, MPIC quarterly earnings fall, capex halved

Ralf Rivas
Despite the harsh earnings dip in the 1st quarter of 2020, Metro Pacific Investments Corporation chairman Manny Pangilinan says workers' welfare comes first over profitability

EARNINGS. Construction of the Cavite-Laguna Expressway. Photo from Metro Pacific Investments Corporation website

MANILA, Philippines – Metro Pacific Investments Corporation (MPIC) posted slower quarterly earnings growth, the first ever in its corporate history, due to the coronavirus pandemic.

MPIC’s core net income declined by 6% to P3.4 billion in the 1st quarter of the year, lower than the P3.7 billion recorded during the same period in 2019.

MPIC president Jose Ma. Lim also disclosed in a virtual press briefing that the conglomerate would slash its capital expenditures (capex) for 2020 to P80 billion from a massive P160 billion, as the enhanced community quarantine (ECQ) stopped construction works and transportation. (WATCH: Rappler Talk: Saving the economy from a pandemic)

“Our first ever fall in year-on-year quarterly earnings is understandable, but overall I believe the strength of our portfolio, most especially power and water, has been demonstrated in the face of the pandemic, and despite investors’ stated concerns on regulatory issues,” said MPIC chairman Manny Pangilinan.

“At this time, our priorities are, in order: welfare of our people; service to our customers; cash preservation; and then profitability. Under an extremely fluid environment, it would be difficult to provide with a fair degree of reliability a preview of what the full-year 2020 could look like. But for now, it is likely that our 2nd quarter results are likely to fall short of last year’s.”

Power

MPIC’s power business, Manila Electric Company (Meralco), posted a steep 54% decline in net income from P5.7 billion in the 1st quarter last year to P2.6 billion in the same period in 2020. (READ: FALSE: Bills for March and April 2020 now free – Meralco)

Pangilinan earlier said that the “full tragedy” of the pandemic “has yet to unfold” in his businesses.

Meanwhile, Global Power recorded a 10% rise in core net income to P439 million in the 1st quarter, as volume recovered from maintenance shutdowns in 2019 and Alsons Thermal Energy contributed more during the quarter.

Toll roads

Metro Pacific Tollways Corporation (MPTC) suffered an 18% drop in its core net income during the quarter due to the implementation of the ECQ and higher interest costs on increased borrowings.

It earned P900 million during the quarter from P1.1 billion a year ago, as system-wide vehicle entries dropped to just over 844,000 from 914,000 last year.

MPTC said completion of several projects had to be pushed back due to the lockdown. It expects to spend P107 billion to complete current projects, with an additional P25 billion if it secures the Cavite-Tagaytay-Batangas Expressway project.

Water

MPIC’s Maynilad Water Services reported a net income of P1.6 billion, 12% lower than in the same quarter last year.

Maynilad attributed the dip to its heavy investments in reducing leakages and upgrading facilities.

Revenues fell flat at P5.7 billion, as lower average tariffs were able to offset increased billed volume.

Maynilad’s concession agreement with the government is currently under review, as President Rodrigo Duterte repeatedly slammed the company after it won an arbitration case.

Last Monday, May 4, Duterte apologized to Pangilinan and the Zobel brothers for cursing them, as the tycoons poured in millions of pesos for the pandemic response.

Duterte vowed to be “reasonable,” but did not say that the review would be canceled.

Rail

Light Rail Manila Corporation, the operator of Light Rail Transit Line 1 (LRT1), reported a sharp 19% drop in its earnings to just P180 million in the 1st quarter.

LRT operations were shut down in March, leading to a 9% drop in average daily ridership.

Construction of the LRT1 Cavite extension reached 38% prior to the suspension of public works. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.