earnings reports

Meralco net profit plunges by 43% to P6.8 billion in H1 2020

Aika Rey
Meralco chairman Manny Pangilinan says the utility firm was 'not as badly hit as other corporates'

The coronavirus crisis pushed the net income of Manila Electric Company (Meralco) to plunge by 43% to P6.8 billion in the 1st half of 2020, against last year’s P12.3 billion.

Despite the lower net profits, the core net income of its electricity business saw a more manageable decline of 14% to P10.59 billion for the period. Overall revenues dropped by 13.8% to P142.25 billion from P164.95 billion.

The 1st semester report gives some encouragement, said Meralco chairman Manny Pangilinan on Monday, July 27, as energy sales steadily increased in the 2nd quarter.

“While our 1st half results provide some encouragement, uncertainty remains as the effects of COVID-19 continue to impact the nation. We are moving with caution, but remain positive that a recovery is in the offing,” Pangilinan said.

“We’re not as badly hit as other corporates,” he added.

Pangilinan said full-year core income is expected to decline within the 10% to 12% range to about P21 billion compared to 2019’s P23.8 billion.

In the 1st half of the year, energy sales were down by 7% to 21,139 gigawatts per hour (GWh).

Meralco first vice president and head of customer retail services and corporate communications Victor Genuino explained that energy sales peaked in June at 3,953 GWh, with the residential segment taking up 47% or 1,847 GWh. June sales were up by 32.78%, coming from a 1st semester low of 2,977 GWh in April.

While there has been a steady increase in energy consumption for the industrial and commercial segments since April, these lagged behind in the mix at 25% or 1,003 GWh and 28% or 1,091 GWh in June, respectively. The commercial segment decreased by 26% last month compared to January sales as some retail spaces, hotels, and restaurants remained closed.

Pangilinan said the sales growth of the commercial and industrial segments would be heavily dependent on decisions of the national government’s coronavirus task force, as quarantine restrictions change every two weeks.

In the coming months, the utility firm expects commercial energy sales to be fueled by Philippine offshore gaming operations, business processing outsourcing operations, and the reopening of retail shops.

Operating expenses for the 1st semester increased by 9% to P13.78 billion. Overall, costs and expenses reached P135.25 billion from January to June, lower than the P149.6 billion from the same period last year as capital expenditures were down by 35.9% to P6.86 billion.

The average rate for the 1st half of 2020 was at P8.19 per kilowatt hour, 13% lower than last year. – Rappler.com

Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.